Which of the following is true of accounting equation?
A) It is used to place records into understandable categories that are useful for managing a business.
B) It assumes that a successful business will stay in business and this enables long-range planning and strategy.
C) It underlies the legal forms of establishing businesses,such as corporations,limited partnerships,and limited liability companies.
D) It ensures that accounting information is useful to the firm's stakeholders.

Question

Quizplus · Accepted Answer

The accounting equation (Assets = Liabilities + Equity) is used to categorize records and provide a clear understanding of a business's financial position.

Answer: B
 The accounting equation assumes that a successful business will continue operating, enabling long-term planning and strategy development.

Answer: C
 The accounting equation is a fundamental concept underlying various legal forms of businesses such as corporations, limited partnerships, and limited liability companies.

Answer: D
 The accounting equation ensures that financial information is reliable and useful for all stakeholders, including investors, creditors, and management.

Which of the Following Is True of Accounting Equation