Question

Which one of the following represents the expanded basic accounting equation?
Select one:
a. Assets = Revenues + Expenses – Liabilities
b. Assets + Dividends + Expenses = Liabilities + Common stock + Retained Earnings + Revenues
c. Assets = Liabilities + Common stock + Retained Earnings + Dividends – Revenues – Expenses
d. Assets – Liabilities – Dividends = Common stock + Retained Earnings + Revenues – Expenses

Answer 1

Answer:

Option B.

Explanation:

Basic accounting equation is

Assets = Liabilities + Equity

where,

Equity = Capital + Retained earnings

Retained earnings = Revenue - Expenses - Dividend

On combining these formula, we get

Assets = Liabilities + Capital + Revenue - Expenses - Dividend

It can be rewritten as

Assets + Dividend + Expenses = Liabilities + Capital + Revenue

Assets + Dividends + Expenses = Liabilities + Common stock + Retained Earnings + Revenues

Therefore, the correct option is B.