The basic accounting equation is in balance when the creditor and ownership claims against the business equal the assets.

Question

Quizplus · Accepted Answer

This is because the basic accounting equation states that Assets = Liabilities + Owner's Equity. In other words, the resources or assets owned by the business must be financed by either creditors (liabilities) or the business owner (owner's equity). Therefore, when liabilities and owner's equity are added together, they should equal the total assets of the business.

The Basic Accounting Equation Is in Balance When the Creditor