The balance sheet equation provides the conceptual basis for all financial statements and can be rearranged to incorporate the statement of cash flows as follows:
A)Cash + Noncash assets = Liabilities + Stockholders' equity
B)Cash - Noncash assets = Liabilities + Stockholders' equity
C)Assets = Liabilities - Noncash assets + Stockholders' equity
D)Assets = Liabilities + Noncash assets + Stockholders' equity
E)Liabilities - Noncash assets = Cash + Stockholders' equity

Question

Quizplus · Accepted Answer

The correct equation is A) Cash + Noncash assets = Liabilities + Stockholders' equity. This is because the balance sheet equation (Assets = Liabilities + Stockholders' equity) includes both cash and noncash assets as part of the total assets.

The Balance Sheet Equation Provides the Conceptual Basis for All