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

Accounting Dec 16, 2020

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

Expert Solution

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.

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