Basics of Accounting › Elements of Accounting › Question #24248
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QWhich of the following is a basic accounting equation:

ID: #24248 Elements of Accounting 48 views
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#24248Q ID
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Elements of AccountingTopic
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  • A Net Worth = Assets + Profits ✔ ✖
  • B Gross Profit - Sales = Gross Profit Margin ✔ ✖
  • C Assets = Liabilities + Owner’s Equity ✔ ✖
Correct Answer: Option C

Explanation

The correct answer is:

C. Assets = Liabilities + Owner’s Equity ✅

👉 Explanation:

  • This is the fundamental accounting equation, which forms the foundation of double-entry bookkeeping.

  • It shows that everything a business owns (Assets) is financed either by:

    • Liabilities (borrowed funds) or

    • Owner’s Equity (owner’s investment).

  • Other options are either incorrect formulas or relate to profit calculations, not the basic accounting structure.

💡 Remember: Assets always equal the sum of Liabilities and Equity — it keeps the books balanced.

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