Which of the Following Best Describes Why the Left and Right

question 36

Multiple Choice

Which of the following best describes why the left and right sides of a statement of financial position are equal?

• A)In a properly run business,the value of liabilities will not exceed the assets held by the company.
• B)By definition,the assets plus the liabilities will be the same as the stockholders' equity.
• C)The assets must equal liabilities plus stockholders' equity,because stockholders' equity is the difference between the assets and the liabilities.
• D)By accounting convention,the assets of a company must be equal to the liabilities of that company.
• E)Assets must always exceed liabilities or the company will be bankrupt.

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Definitions:

Per Hundred

A phrase used to denote or calculate rates, statistics, or proportions out of a hundred.

Percentage

A numerical expression or ratio indicating a portion of 100.

Percent

A mathematical term describing a number or ratio expressed as a fraction of 100.

Improper Fraction

A fraction where the numerator is greater than or equal to the denominator.