Total assets less outstanding debt must always equal ownership equity.

Name: Total assets less outstanding debt must always equal ownership equity.
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Question

Quizplus · Accepted Answer

This equation is known as the accounting equation and is fundamental to double-entry bookkeeping. It must always balance, meaning that assets must equal liabilities plus equity. Subtracting outstanding debt from total assets leaves only equity, which ensures that the equation remains in balance.

Total Assets Less Outstanding Debt Must Always Equal Ownership Equity