The equation, assets = equities, expresses which of the following theories of equity?
A) Proprietary theory.
B) Commander theory.
C) Entity theory.
D) Enterprise theory.

Question

Quizplus · Accepted Answer

The equation assets = equities belongs to the concept of entity theory. According to entity theory, a business is considered a separate economic entity from its owners. Therefore, there is a clear distinction between personal and business assets and equities. This theory is commonly applied in financial accounting and reporting, where financial statements present a clear picture of a business's financial performance regardless of its owners' interests.

The Equation, Assets = Equities, Expresses Which of the Following