Multiple Choice
According to the fundamental accounting equation, the sum of accounts with debit balances must equal the sum of accounts with credit balances. Which of the following best represents this equation?
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1. Introduction to Accounting
Fundamental Accounting Equation
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Keeping track of what you earn, spend, and save are key parts of a:
A
depreciation schedule
B
trial balance
C
balance sheet only
D
personal accounting system
Verified step by step guidance1
Understand the concept of a personal accounting system: It involves tracking your income (earnings), expenses (spending), and savings to manage your finances effectively.
Recognize that a depreciation schedule is used in accounting to allocate the cost of an asset over its useful life, which is unrelated to personal finance tracking.
Understand that a trial balance is a bookkeeping tool used to ensure that debits and credits in a ledger are balanced, which is also unrelated to personal finance tracking.
Learn that a balance sheet is a financial statement showing assets, liabilities, and equity at a specific point in time, but it does not encompass the broader scope of tracking earnings, spending, and savings.
Conclude that the correct answer is a personal accounting system, as it directly involves managing and tracking personal financial activities like earning, spending, and saving.
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