Business FinancesQuestion 292 of 1632
The fundamental accounting equation expressed on a balance sheet is:
a.Revenue minus expenses equals the profit
b.Assets plus liabilities are the equity
c.Assets equal liabilities plus equity
d.Assets minus equity equals revenue
Explanation
The balance sheet rests on Assets = Liabilities + Owner's Equity, which is why every entry keeps the two sides level. Revenue minus expenses is the income statement's equation and produces profit, not a balance. Adding liabilities to assets double-counts what is owed: equity is assets less liabilities, not their sum. And assets minus equity gives liabilities, never revenue, which belongs to a different statement altogether.
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Related questions on this topic
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