Which of the following is an 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 states that assets must equal liabilities plus equity. Equity is broken down into common stock and retained earnings, making A the most accurate depiction of the equation. Expenses and dividends are not components of equity and should not be included in the equation.

Which of the Following Is an Accurate Depiction of the Accounting