Multiple Choice
According to the fundamental accounting equation, what is the first priority when preparing a budget?
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1. Introduction to Accounting
Fundamental Accounting Equation
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
In the context of the fundamental accounting equation, what is the amount remaining after the value of all liabilities is subtracted from the value of all assets?
A
Total Revenue
B
Gross Profit
C
Owner's Equity
D
Net Income
Verified step by step guidance1
Understand the fundamental accounting equation: Assets = Liabilities + Owner's Equity.
Rearrange the equation to isolate Owner's Equity: Owner's Equity = Assets - Liabilities.
Identify the values for Assets and Liabilities provided in the problem or scenario.
Subtract the total value of Liabilities from the total value of Assets using the formula Owner's Equity = Assets - Liabilities.
Interpret the result as the Owner's Equity, which represents the residual interest in the assets of the entity after deducting liabilities.
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