Which of the following equations is correct?
A) Assets = Liabilities + Owners' Equity - (Income - Expenses)
B) Assets + (Income + Expenses) = Liabilities + Owners' Equity
C) Assets + Liabilities + Owners' Equity = Income - Expenses
D) Assets - Liabilities = Owners' Equity + (Income - Expenses)

Question

Quizplus · Accepted Answer

The equation Assets - Liabilities = Owners' Equity + (Income - Expenses) is the correct accounting equation. This equation shows that the total value of assets is equal to the sum of liabilities and owners' equity, which includes both contributed capital and retained earnings. Additionally, it shows that owners' equity is further impacted by income and expenses.

Which of the Following Equations Is Correct