Which is a true statement regarding the accounting equation?
A)The equation can be stated as assets minus liabilities equals equity.
B)The equation consists of three parts: assets,liabilities,and net income.
C)The equation is an optional tool for accountants to use.
D)The equation does not need to balance during a specific period.

Question

Quizplus · Accepted Answer

The accounting equation is always true and must balance. It states that assets equal liabilities plus equity. However, it can also be rearranged as assets minus liabilities equals equity.

Answer: B
 The accounting equation consists of three parts: assets, liabilities, and equity. Net income is not a part of the equation but affects the equity section through retained earnings.

Answer: C
 The accounting equation is a fundamental concept that must be understood and used in accounting. It is not an optional tool.

Answer: None
 Option D is false. The accounting equation must always balance during a specific period. All transactions affect the equation and must be accounted for to maintain balance.

Which Is a True Statement Regarding the Accounting Equation