Ridgley, Cooper, and Ross (RCR)
Katie is the CEO of Ridgley, Cooper, and Ross (RCR), a regional accounting firm. RCR offers services in most areas of accounting, including auditing and consulting services. The firm must follow the GAAP rules, just like any other accounting firm. If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act. Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations. Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained.
-Refer to Ridgley, Cooper, and Ross. If you applied for a job at RCR and were asked to state the accounting equation, which of these would you state?
A) Assets = liabilities ― owners' equity
B) Assets + liabilities = owners' equity.
C) Assets ― liabilities = owners' equity
D) Assets = liabilities + owners' equity,
E) Assets = liabilities ― owners' equity.,

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Owners' Equity. This equation illustrates the relationship between a company's assets (what it owns), liabilities (what it owes), and owners' equity (what's left over for the owners). It is important for anyone working at an accounting firm to understand this fundamental equation.