The fundamental accounting equation states: assets = _________.

  • A. Liabilities minus owners' equity.
  • B. Liabilities plus receivables.
  • C. Payables plus cash equivalents.
  • D. Lliabilities plus owners' equity.
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Fundamental accounting equation also known as balance sheet equation states: Assets = Liabilities + Owner's Equity Option D is correct.
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Capital are the resources provided/supplied by the owner to/for a company. The resources provided by the owner of business are called capital. The resources in a business are called its assets. If all the resources are supplied by the owners, Assets = Capital Resources provided by other than owners are called liabilities. In that case, Assets = Liabilities + Capital Capital is the term to use in beginning of the business. Once business runs, it become owner’s equity meaning owner’s share in assets. Assets = Liabilities + Owner’s equity More on accounting equation in lecture handout.
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