Primary accounting equation is: Assets = Liabilities + Owner’s Equity Owner’s equity in business can be expanded easily in terms of original capital, drawings and profit. It would affect equation in following way: Assets = Liabilities + Original Capital + Profit – Drawings Other expanded versions of basic accounting equation can be Assets = Liabilities + Paid-in Capital + Revenues – Expenses - Dividends – Treasury Stock Assets = Liabilities + Owner's Capital - Owner's Drawings + Revenues – Expenses It can go so on and on. From given options, only option B matches the accounting equation requirements.
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