Which of the following equations is the balance sheet equation?
Posted: Sat Aug 07, 2021 6:45 am
A) Assets + Liabilities = Stockholders' Equity.
B) Assets + Stockholder's Equity = Liabilities.
C) Assets = Liabilities + Stockholders' Equity.
D) Assets = Liabilities + Common Stock.
Answer: C
Explanation: A balance sheet has two sides: the left side is assets and the right side has both
liabilities and stockholders' equity. The total balance from each side must equal each other. Thus,
Assets = Liabilities + Stockholders' Equity.
B) Assets + Stockholder's Equity = Liabilities.
C) Assets = Liabilities + Stockholders' Equity.
D) Assets = Liabilities + Common Stock.
Answer: C
Explanation: A balance sheet has two sides: the left side is assets and the right side has both
liabilities and stockholders' equity. The total balance from each side must equal each other. Thus,
Assets = Liabilities + Stockholders' Equity.