Which of the Following Statements Is Correct

question 7

Multiple Choice

Which of the following statements is correct?

• A) Assets are future cash outflows
• B) Liabilities are future cash inflows
• C) Assets are the sum of liabilities and owner's equity
• D) Assets are the difference between liabilities and owner's equity

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

Balance Sheet

An accounting report detailing a business's assets, debts, and owner's equity on a certain date.

Equity and Debt

The two main types of financing for companies: equity represents ownership (stocks), and debt represents borrowed funds (bonds or loans) that must be repaid.

Tax Deductible

Costs that can be deducted from total income to lower the taxable income amount.