Which of the Following Is the Correct Accounting Equation

question 74

Multiple Choice

Which of the following is the correct accounting equation?

• A) Assets + Liabilities = Equity
• B) Assets = Liabilities + Equity
• C) Assets + Revenues = Equity
• D) Assets + Revenues = Liabilities + Expenses

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Definitions:

Adjusting Entries

At the end of a financial period, entries are made in the books to correctly allocate profits and outlays to the period they belong to.

Inter-Relationship of Accounts

The connection and impact that different financial accounts have on each other within the accounting system.

Operations

The day-to-day activities involved in running a business that are necessary for producing and delivering its goods and/or services to the market.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.