[amp_mcq option1=”Assets = Capital” option2=”Assets = Liabilities – Capital” option3=”Assets = Liabilities + Capital” option4=”None of the above” correct=”option3″]
The correct answer is C. Assets = Liabilities + Capital.
Assets are the things a company owns that have value. Liabilities are the things a company owes. Capital is the difference between assets and liabilities.
The equation Assets = Liabilities + Capital is called the accounting equation. It is the foundation of accounting and it is used to track the financial performance of a company.
Option A is incorrect because assets are not equal to capital. Assets are equal to liabilities plus capital.
Option B is incorrect because assets are not equal to liabilities minus capital. Assets are equal to liabilities plus capital.
Option D is incorrect because C is the correct answer.