Which of the following statements is correct?
A) Assets are future cash outflows
B) Liabilities are future cash inflows
C) Assets are the sum of liabilities and owner's equity
D) Assets are the difference between liabilities and owner's equity

Question

Quizplus · Accepted Answer

Assets represent the resources owned by an entity that are expected to provide future economic benefits. Liabilities, on the other hand, represent obligations that the entity owes to others, which are expected to result in future cash outflows. Owner's equity represents the residual interest in the assets of the entity after deducting liabilities. Therefore, assets are the sum of liabilities and owner's equity. Option A and B are incorrect as they confuse assets with liabilities. Option D is also incorrect as it suggests that assets can be negative, which is not possible.

Which of the Following Statements Is Correct