Which of the following is the most accurate depiction of the accounting equation?
A)Assets = Liabilities + Common Stock + Retained Earnings
B)Assets = Liabilities + Common Stock − Expenses
C)Assets = Liabilities + Retained Earnings − Dividends
D)Assets = Liabilities + Common Stock + Dividends

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Equity. Equity is further broken down into Common Stock and Retained Earnings. Therefore, A is the most accurate depiction of the accounting equation. B is incorrect because expenses are not part of the equation. C is incorrect because dividends are not included in the equation. D is incorrect because dividends are not included in the equation and it does not include Retained Earnings.

Which of the Following Is the Most Accurate Depiction of the Accounting