Which of the following describes the fundamental identity embodied in a balance sheet?
A)Net Worth plus Assets equal Liabilities
B)Assets plus Liabilities equal Net Worth
C)Assets equal Liabilities plus Net Worth
D)Assets plus Reserves equal Net Worth

Question

Quizplus · Accepted Answer

The fundamental identity embodied in a balance sheet is Assets equal Liabilities plus Net Worth, which is also known as the accounting equation. This means that a company's assets are either financed by its liabilities or its equity (net worth). Therefore, the sum of a company's liabilities and equity must always equal its total assets.

Which of the Following Describes the Fundamental Identity Embodied in a Balance