Practicing Success
Which of the following is true for the accounting equation? |
Assets = Liabilities + Capital Assets + Liabilities = Capital Assets = Liabilities - Capital Assets + Capital = Liabilities |
Assets = Liabilities + Capital |
The correct answer is option 1- Assets = Liabilities + Capital. Accounting equation signifies that the assets of a business are always equal to the total of its liabilities and capital (owner’s equity). The equation is as follows: Since, the accounting equation depicts the fundamental relationship among the components of the balance sheet, it is also called the Balance Sheet Equation. |