Question

The accounting equation can be stated as:(A) −A + L − OE = 0.
(B) A − L − OE = 0.

(C) A − L + OE = 0.
(D) A + L − OE = 0.

Answer 1

Answer:

The correct option is B

Explanation:

The accounting equation is the foundation of the double entry system of accounting. It states the balance sheet of the company where aggregate of all the company assets equals to the sum of shareholders' equity or Owners equity and liabilities of the company.

It is stated as:

Assets =  Liabilities + Shareholders' equity (Owners Equity)

It could be stated as:

Assets (A) -  Liabilities (L) - Shareholders' equity (SE or OE) = 0