Which of the Following Best Describes Why the Left and Right

question 65

Multiple Choice

Which of the following best describes why the left and right sides of a balance sheet are equal?

• A)By definition, the assets plus the liabilities will be the same as the shareholders' equity.
• B)In a properly run business, the value of liabilities will not exceed the assets held by the company.
• C)The assets must equal liabilities plus shareholders' equity, because shareholders' 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.

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Definitions:

Title Passes

The point at which ownership of property is transferred from one party to another, typically upon the fulfillment of specified conditions.

Seller Completes Performance

The point at which a seller has fulfilled their contractual obligations in a transaction, typically resulting in the transfer of goods or services to the buyer.

Security Interests

Legal claims on assets that are used as collateral to secure loans or other obligations.

Personal Property

Movable property that is not fixed to one location and can be tangible, like cars and furniture, or intangible, such as stocks and bonds.