Assets = Liabilities + Owners equity

Explanation: Assets = Liabilities + Owners equity. This is the fundamental equation in financial accounting. The owner of a business brings capital which is a liability of the business to the owner. The cash brought in as capital will be used for purchase of land, building, furniture besides further investment in current assets. Again, the business may resort to outside borrowing the funds derived there from are used in purchase of assets. So, at any point of time the total assets equal Liabilities (outside) and owners' equity (liability of the business to the owner). Sources of funds and Use of funds are always equal. This is again the principles of Double entry book keeping.