Accounting is governed by the balance sheet equation, which shows the equality of
A)assets with liabilities plus shareholders' equity.
B)assets plus liabilities with shareholders' equity.
C)assets plus shareholders' equity with liabilities.
D)assets with liabilities minus shareholders' equity.
E)assets with shareholders' equity minus liabilities.

Question

Quizplus · Accepted Answer

The balance sheet equation is Assets = Liabilities + Shareholders' Equity. This equation shows that the total assets of a company are always equal to the sum of its liabilities and shareholders' equity. This equation is the foundation of accounting and is used to ensure that a company's books are balanced. Choice A accurately reflects the balance sheet equation.

Accounting Is Governed by the Balance Sheet Equation, Which Shows