Multiple choice

Which of the following is the correct accounting equation?

  1. Liabilities + Owner’s Equity = Assets

  2. Assets = Liabilities + Owner’s Equity

  3. Net Income = Revenue + Expenses

  4. Net Income = Revenue – Expenses
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The fundamental accounting equation is Assets = Liabilities + Owner's Equity. This equation must always remain in balance for every transaction.

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