Which of the following describes the proper form of a balance sheet?
A)Owners' equity is always the first section listed because it is the most important to external users.
B)Cash is always the first asset listed,followed by permanent assets (such as land and buildings),and finally by assets such as receivables and supplies.
C)Liabilities are listed before owners' equity.
D)A subtotal for total assets plus total liabilities is shown.

Question

Quizplus · Accepted Answer

Liabilities are listed before owners' equity on a balance sheet to show the claims of creditors before the claims of the owners. This follows the accounting equation: Assets = Liabilities + Owners' Equity. Additionally, A and B are incorrect because there is no universally agreed-upon order for listing the sections of a balance sheet, and D is incorrect because a balance sheet should show the total assets and total liabilities separately, with the difference representing the owners' equity.

Which of the Following Describes the Proper Form of a Balance