Identify which one of the following statements is false.
A) Owners' equity solely represents the profits made by an organization in the current period.
B) Assets must always equal the sum of liabilities and owners' equity.
C) Liabilities are economic obligations or claims against the assets of an organization by outsiders.
D) Assets are economic resources which are expected to benefit future cash inflows or reduce future cash outflows.

Question

Quizplus · Accepted Answer

Owners' equity represents the residual interest in the assets of the entity after deducting liabilities, not just the profits made in the current period. It includes retained earnings, which accumulate over time, and any additional paid-in capital.

Identify Which One of the Following Statements Is False