Under which of the following theories would the accounting equation be Total Assets - Total Liabilities = Owners' Equities?
A)Residual equity theory
B)Proprietary theory
C)Entity theory
D)Commander theory

Question

Quizplus · Accepted Answer

The accounting equation under the proprietary theory is Total Assets - Total Liabilities = Owners' Equities. This theory considers the business as an extension of the owner(s) and focuses on the interests of the owner(s), rather than the entity itself. Under this theory, the owner(s) have proprietary interest in the business and are responsible for its financial results.

Under Which of the Following Theories Would the Accounting Equation