Multiple Choice
Which statement below best describes the fundamental accounting equation?
62
views
1. Introduction to Accounting
Fundamental Accounting Equation
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following represents the basic accounting equation?
A
Owner's Equity = Assets - Revenues
B
Assets = Revenues - Expenses
C
Assets = Liabilities + Owner's Equity
D
Liabilities = Assets + Owner's Equity
Verified step by step guidance1
Step 1: Understand the basic accounting equation, which is the foundation of financial accounting. It states that the total assets of a company are equal to the sum of its liabilities and owner's equity.
Step 2: Recall the formula for the basic accounting equation: Assets = Liabilities + Owner's Equity. This equation ensures that the balance sheet remains balanced.
Step 3: Analyze the options provided in the problem. Compare each option to the basic accounting equation to determine which one matches the correct formula.
Step 4: Eliminate incorrect options by identifying any deviations from the basic accounting equation. For example, 'Owner's Equity = Assets - Revenues' and 'Liabilities = Assets + Owner's Equity' do not align with the correct formula.
Step 5: Confirm that the correct answer is 'Assets = Liabilities + Owner's Equity,' as this represents the fundamental relationship in accounting.
8:45mWatch next
Master Fundamental Accounting Equation with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Fundamental Accounting Equation practice set
Problem sets built by lead tutorsExpert video explanations