The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:
A) Return on equity ratio.
B) Accounting equation.
C) Net income.
D) Business equation.
E) Income statement equation.

Question

Quizplus · Accepted Answer

The given description describes the accounting equation which is Assets = Liabilities + Equity. This equation shows that a company's assets are funded by a combination of its liabilities and equity. Therefore, the correct answer is B) Accounting equation.

The Description of the Relation Between a Company's Assets, Liabilities