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Homework answers / question archive / The rule for the balance sheet is: A) Assets = Liabilities + Owner's Equity B) Assets - Liabilities = Owner's Equity C) Liabilities = Assets - Owner's Equity D) All of the above
The rule for the balance sheet is:
A) Assets = Liabilities + Owner's Equity
B) Assets - Liabilities = Owner's Equity
C) Liabilities = Assets - Owner's Equity
D) All of the above
Correct Answer : D) All of the above
The rule for the balance sheet is Assets = Liabilities + Owner's Equity which is also called the accounting equation. It can also be written as :
Asset - Liabilities = Owner's Equity
or Asset= Liabilities + Owner's Equity
or Liabilities =Asset - Owner's Equity
The accounting equation is based on double-entry accounting, which means, for every debit, there is equal and opposite credit. It helps to prepare a balance sheet, so it is also called the Balance Sheet Equation.
