he most important feature of the balance sheet equation is that it must always balance. And that's why we're going to talk about something they call double entry book keeping. If you increase something on one side of the equation, you have to increase or decrease something else to stay in balance. So, there has to be at least two entries any time you tinker with the balance sheet equation. And as we'll see, the changes between two Balance Sheets are going to be summarized in the Income Statement, the Statement of Stockholders' Equity, and the Statement of Cash Flows. So let me show you this graphically. So let's say we have a balance sheet at the end of December 31, 2014. Assets equal liabilities plus stockholders' equity. We'll split the assets into cash and non-cash assets, and we'll split stockholders' equity into contributed capital and retained earnings, which are concepts we'll talk more about in later videos.