What is the basic accounting equation? A. Capital + Liabilities = assets B. Assets + Liabilities = Capital C. Capital + Assets = Liabilities D. Liabilities – Capital = Assets

The correct answer is: A. Capital + Liabilities = Assets

The basic accounting equation is Assets = Liabilities + Capital. This equation states that the total value of a company’s assets is equal to the total value of its liabilities plus the total value of its owner’s equity.

Assets are the resources that a company owns and expects to benefit from in the future. Liabilities are the obligations that a company owes to others. Capital is the owner’s equity in a company. It is the difference between the company’s assets and its liabilities.

The basic accounting equation is a fundamental principle of accounting. It is used to track the financial performance of a company over time. It is also used to prepare financial statements, such as the balance sheet and the income statement.

Here is a brief explanation of each option:

• Option A: Capital + Liabilities = Assets. This is the correct answer. It is the basic accounting equation.
• Option B: Assets + Liabilities = Capital. This is not the correct answer. The order of the terms is reversed.
• Option C: Capital + Assets = Liabilities. This is not the correct answer. The assets and liabilities are on the wrong side of the equation.
• Option D: Liabilities – Capital = Assets. This is not the correct answer. The liabilities and capital are on the wrong side of the equation.