Multiple choice

Which of the following is correct?

  1. A = L + C

  2. C = A - L

  3. L = A - C

  4. All of them

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All three equations are mathematically equivalent to the fundamental accounting equation: Assets = Liabilities + Capital. Option A shows the standard form, Option B (Capital = Assets - Liabilities) rearranges to show what owners claim after paying debts, and Option C (Liabilities = Assets - Capital) shows what must be paid to outsiders after accounting for owner's equity. All are correct representations of the same relationship.

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