The balance sheet is set up to reflect the Fundamental Accounting Equation. This equation shows
A) Assets = Liabilities + Owners' equity.
B) Revenues - Expenses = Gross profit.
C) Cash inflows = Cash outflows.
D) Current assets + Current liabilities = Owners' equity.

Question

Quizplus · Accepted Answer

The Fundamental Accounting Equation states that Assets must always equal the sum of Liabilities and Owners' equity. This is reflected in the setup of the balance sheet, with Assets on one side and Liabilities + Owners' equity on the other side.

The Balance Sheet Is Set Up to Reflect the Fundamental