Assets are resources the business controls. Liabilities are obligations it owes. Equity is the owner's remaining claim. The basic equation is assets = liabilities + equity. Borrowed cash increases both assets and liabilities; receiving a loan is not revenue.
Worked example
A pretend workshop has 90 dollars of assets and owes 25 dollars. Equity is 90 - 25 = 65 dollars. The check is 90 = 25 + 65. This is a simplified bookkeeping model, not financial or tax advice.
Three Fictional Transactions
Start with no balances. First, the owner contributes 120 pretend dollars in cash. Second, the workshop borrows 50 dollars with no interest in this exercise. Third, it buys equipment for 40 dollars cash. The equipment is recorded as a 40-dollar asset; ignore depreciation, taxes and fees. No sales or expenses occur in these three steps.