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Today, 06:52

Which of the statements correctly represents the accounting equation?

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  1. Today, 07:01
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    What the accounting equation tells us is that everything that a firm owns, it acutally either owes it to the owners of the firm, or to creditors.

    Explanation:

    This is why the accounting equation is represented as:

    Assets = Liabilities + Stockholders' Equity

    Where Assets represent what the firm owns, liabilities is what the firm owes to creditors, and Stockholders' Equity (or Owners' Equity) is what the firm owes to the owners.
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