Question

Brenda created this personal balance sheet. brenda's balance sheet assets liabilities jewelry food wages health insurance commission rent bank account tips total total brenda says her assets are definitely greater than her liabilities. which explains whether brenda is correct? brenda is correct because she has five assets and only three liabilities. brenda is correct because all the items should be in the assets column of the balance sheet. brenda is not correct because the total value of her assets could be less than the liabilities. brenda is not correct because she needs to list more liabilities.

Answer 1

Answer

Brenda is not correct because the total value of her assets could be less than the liabilities

Explanation

In preparing a balance sheet, one is supposed to apply the basic accounting equation which is;

Assets=Liabilities +Owner’s Equity

This ensures that the principle of double entry is attained. If the balance sheet being prepared does not balance, it is an indication that there is a error in accounting entry.

Answer 2

Brenda is not correct because the total value of her assets could be less than the liabilities.