Which is a TRUE statement regarding the accounting equation?
A) The equation can be stated as assets minus liabilities equals equity.
B) The equation consists of three parts: assets, liabilities, and net income.
C) The equation is an optional tool for accountants to use.
D) The equation does not need to balance during a specific period.

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Equity, which can be rearranged as Assets - Liabilities = Equity. This statement accurately describes the equation.

Option B is incorrect because the accounting equation consists of three parts: assets, liabilities, and equity, not net income.

Option C is incorrect because the accounting equation is a fundamental concept in accounting and is not optional.

Option D is incorrect because the accounting equation must always balance, representing the fundamental principle of double-entry bookkeeping.

Which Is a TRUE Statement Regarding the Accounting Equation