The true statement is:

Question

Quizplus · Accepted Answer

Equity represents the owner's claim to the assets of the entity after deducting all liabilities. This means that if all liabilities were paid off, the equity would represent the amount that the owner would receive. Option A is incorrect because profit can be represented through other means, such as an increase in accounts receivable or inventory. Option B is incorrect because a withdrawal by the owner is not an expense, it reduces equity. Option D is incorrect because profit is calculated using revenues and expenses, not changes in net assets.

The True Statement Is