Which of the Following Is the Reason That the Accounting

question 39

Multiple Choice

Which of the following is the reason that the accounting equation is true by definition?

• A) Liabilities are the source that funds the purchase of assets
• B) Assets are the source that funds the purchase of liabilities and owner's equity
• C) Liabilities and owner's equity are the sources that fund the purchase of assets
• D) None of these are true, the accounting equation is merely a coincidence

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Definitions:

Condensed Balance Sheets

A simplified financial statement showing the summary of a company's financial position, including assets, liabilities, and equity at a specific point in time.

Excess Consideration

The amount by which the price paid for an acquisition exceeds the total fair value of its identifiable net assets.

Noncurrent Assets

Assets not expected to be converted into cash, sold, or consumed within one year or the operating cycle, such as property, plant, and equipment.

Multiple Acquisitions

The process by which a company buys several companies in a short period, often to consolidate their industry or diversify.