Question

The equation best describing the balance sheet is:

A. Revenues − Expenses = Net Income.

B. Ending Retained Earnings + Dividends = Net Income.

C. Assets = Liabilities + Stockholders' Equity.

D. Revenues + Expenses = Net Income.

Answer 1

Answer: Option C

Step-by-step explanation: Balance sheet refers to the financial statement that shows the assets and liabilities of an entity for a single year.

It is based on the assumption that all the assets owned by an entity are either funded from the owners capital or a liability is incurred to procure them. Thus, the amount of assets will always be equal to the sum of capital funds and liabilities of the entity.

Hence from the above we can conclude that the correct option is C.