The Accounting Equation Must Always Be in Balance

question 44

True/False

The accounting equation must always be in balance.

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Definitions:

Future Payments

Obligations that are due to be paid at a future date.

Liabilities

Debts or obligations that arise during the course of business operations, which must eventually be paid off or settled.

Contingent Liabilities

Potential liabilities that may occur depending on the outcome of a future event.

Times Interest Earned

A financial metric assessing a company's capacity to fulfill its debt responsibilities using its present earnings.