Which of the following is the basic accounting equation?
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Correct Answer: Option A
Explanation:
The basic accounting equation represents the foundation of double-entry bookkeeping. It shows that the total assets of a company are always equal to the sum of its liabilities and owner's equity (capital).
Mathematically, it can be expressed as:
Assets = Liabilities + Equity (Capital)
This equation ensures that the accounting records are always balanced — for every transaction, the value of assets acquired or used is offset by liabilities or the owner’s capital invested.
The basic accounting equation represents the foundation of double-entry bookkeeping. It shows that the total assets of a company are always equal to the sum of its liabilities and owner's equity (capital).
Mathematically, it can be expressed as:
Assets = Liabilities + Equity (Capital)
This equation ensures that the accounting records are always balanced — for every transaction, the value of assets acquired or used is offset by liabilities or the owner’s capital invested.