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What is the accounting equation?

  1. A Assets = Liabilities + Owner's Equity
  2. B Assets = Liabilities - Owner's Equity
  3. C Assets + Liabilities = Owner's Equity
  4. D Assets + Owner's Equity = Liabilities
Answer

Assets = Liabilities + Owner's Equity

Every transaction keeps this equation in balance. Assets are funded either by borrowing (liabilities) or by owners (equity), which is the basis of double-entry bookkeeping.

All Accounting MCQs

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