Question

For each transaction recorded in an accounting system, the basic equation that must be maintained at all times is: Revenues = Expenses + Dividends. Assets = Liabilities. Cash Increases = Cash Decreases. Assets = Liabilities + Stockholders' Equity.

Answer 1

Answer: Assets = Liabilities + Stockholders Equity.

 

Explanation: Assets refers to the resources owned by a firm for operating its business. Equity refers to the amount of fund invested in the business by the shareholders and liabilities are the obligations of the business.

Thus, it is assumed that every asset that an organisation owns is either purchased by the funds that belongs to the shareholders or on credit by taking liabilities into account.

Hence, from the above we can conclude that ,Assets = Liabilities + Stockholders Equity, correctly depicts the accounting equation.