The accounting equation can be stated as:

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Equity. Equity can be further broken down into Paid-in Capital and Retained Earnings, so the full equation is Assets = Liabilities + Paid-in Capital + Retained Earnings. Option A is incorrect because it subtracts Common Stock instead of adding it to the equation. Option B is incorrect because it erroneously states that liabilities and equity are equal. Option D subtracts dividends, which is not a component of Equity.

The Accounting Equation Can Be Stated As