On the balance sheet, owner's equity is a. equal to the total of assets and liabilities b. subtracted from liabilities and the net amount is equal to assets c. added to assets and the two are equal to liabilities d. added to liabilities and the two are equal to assets

Question

Business

Zeke

29 March, 14:16

On the balance sheet, owner's equity is a. equal to the total of assets and liabilities b. subtracted from liabilities and the net amount is equal to assets c. added to assets and the two are equal to liabilities d. added to liabilities and the two are equal to assets

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Answers (1)

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Maximus · Answer 1

d. added to liabilities and the two are equal to assets.

Explanation:

The accounting equation is also called the balance sheet equation and states the a companie's assets is a sum of the total liabilities and owner's equity.

This is the basis of double entry accounting, where every transaction has an equal amount of debits and credits.

Mathematically

Asset = Liabilities + Owner Equity