Question

Which of the following best describes the basic accounting equation: liabilities + owner equity = assets?

1) Balance sheet
2) Chart of accounts
3) Annual budget
4) Gross profit statement
5) Income statement

Answer 1

The basic accounting equation liabilities + owner's equity = assets is best described by the term balance sheet.

Step-by-step explanation:

The basic accounting equation liabilities + owner's equity = assets is best described by the term balance sheet. A balance sheet is a financial statement that shows a company's assets (what it owns), liabilities (what it owes), and owner's equity (the residual interest in the assets after deducting liabilities). By maintaining a balance between assets and liabilities, the balance sheet provides a snapshot of a company's financial health at a specific point in time.