Which of the four basic financial statements is best represented by the fundamental accounting equation? (2024)

Which of the four basic financial statements is best represented by the fundamental accounting equation?

The four financial statements are all based on a mathematical equation, which states that the dollar value of a company's assets equals the dollar value of its liabilities plus the dollar value of its shareholders' equity. In fact, the balance sheet is a statement of this equation.

Which financial statement is best represented by the fundamental accounting equation?

The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity. As such, the balance sheet is divided into two sides (or sections).

Which of the 4 financial statements illustrates the fundamental accounting equation?

Balance sheet

Based on the basic accounting equation, or balance sheet equation [Assets = Liabilities + Equity], the balance sheet provides a snapshot of a business's assets, liabilities, and equity.

Which financial statements represent the accounting equation?

The balance sheet holds the elements that contribute to the accounting equation: Locate the company's total assets on the balance sheet for the period. Total all liabilities, which should be a separate listing on the balance sheet.

What is the fundamental financial accounting equation?

The accounting equation is a formula that shows the sum of a company's liabilities and shareholders' equity are equal to its total assets (Assets = Liabilities + Equity).

Which of the following statements best represents the accounting equation quizlet?

Which of the following statements best represents the accounting equation? The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

Does the income statement represent the accounting equation?

In the basic accounting equation, assets are equal to liabilities plus equity. You can find a company's assets, liabilities, and equity on key financial statements, such as balance sheets and income statements (also called profit and loss statements).

What is an example of a fundamental accounting equation?

Net Income is added to Equity at the end of the period. Assets $80,200 (Cash $63,900 + Supplies $500 + Prepaid Rent $1,800 + Equipment $5,500 + Truck $8,500)= Liabilities $200)+ Equity $80,000 (Common Stock $30,000 + Net Income $50,000). Note: This does not mean revenue and expenses are equity accounts!

What is the fundamental accounting equation quizlet?

Assets = Liabilities + Owner's Equity

The basic accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a business.

What are the four 4 main financial statements prepared by accountants?

For-profit businesses use four primary types of financial statement: the balance sheet, the income statement, the statement of cash flow, and the statement of retained earnings. Read on to explore each one and the information it conveys.

Which of the following statements best represents the reason for the accounting equation?

Which of the following statements best represents the reason for the accounting equation ? The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.

How is the accounting equation represented?

Like any equation, each side will always be equal. In the accounting equation every transaction will have a debit and credit entry, and the total debits (left side) will equal the total credits (right side). It can be expressed as furthermore: Assets=(Liabilities+Owner's Equity)

Is the balance sheet based on the fundamental accounting equation?

The balance sheet reflects an operation's financial position—its assets, liabilities, and owners' equity —at a given date. The balance sheet reflects, or tests and proves, the fundamental accounting equation-assets equal liabilities plus owners' equity.

What is fundamental of financial statement?

Financial statements are written records that illustrates the business activities and the financial performance of a company. In most cases they are audited to ensure accuracy for tax, financing, or investing purposes.

Which one of the following is the most common statement of the accounting equation?

Answer and Explanation: The correct answer is option c. Assets = Liabilities + Equity. The accounting equation, also known as the balance sheet or the basic accounting equation, is a fundamental principle in financial accounting that establishes the relationship between a company's assets, liabilities, and equity.

Which financial statement is typically prepared first?

The income statement, which is sometimes called the statement of earnings or statement of operations, is prepared first. It lists revenues and expenses and calculates the company's net income or net loss for a period of time.

Which financial statement is prepared from this equation?

The balance sheet is prepared using the accounting equation formula. Therefore, it should be set up as assets = liabilities + equity.

Which of the following best describes accounting?

Answer and Explanation: b. is an information system that provides reports to stakeholders. Accounting is recorded information that provides useful reports to its stakeholders (internal and external users) about the condition and economic activities of the business during a particular period.

What are the disadvantages of the accounting equation?

Some of the disadvantages are given below: The accounting equation does not measure the events or circ*mstances with no monetary value. If any event, such as management, reputation, or loyalty, does not possess money value, it has no place in the accounting equation.

Which of the following is a fundamental accounting concept?

So, here the students are going to learn about these 3 fundamental accounting assumptions which are known as Going Concern, Consistency, and Accrual.

What are the 4 basic financial statements?

There are four basic types of financial statements used to do this: income statements, balance sheets, statements of cash flow, and statements of owner equity.

What are the 4 statements of accounting?

They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders' equity.

What are all 4 financial statements?

Which of the following is an accurate representation of the accounting equation?

Answer and Explanation: The accounting equation is expressed as assets is equal to the sum of liabilities and the stockholders' equity. Reversing the equation, liabilities could be computed by obtaining the difference of assets and equity.

What is the accounting equation and why is it important in accounting?

The accounting equation represents the relationship between the assets, liabilities and capital of a business and it is fundamental to the application of double entry bookkeeping where every transaction has a dual effect on the financial statements.