An equation that represents a balanced account for a business is __.

An equation that represents a balanced account for a business is __.

• A. Assets = Liabilities
• B. Liabilities = Assets
• C. Assets = Revenues
• D. Equity = Assets

Answer: (A)

In accounting, what a business owns (assets) must be matched by the claims against those assets. Those claims come from creditors (liabilities) and, in a complete picture, the owner’s investment (equity). Here, the idea being tested is that the resources on hand are financed by obligations to others, which is shown by assets equaling liabilities in this simplified representation. The other options mix up the relationships: revenues are income, not a funding source; equity is a form of claim but isn’t the sole or direct equality with assets; and reversing the sides would misstate who owns or owes what. In a full balance sheet, you’d still have assets = liabilities + equity, but among these choices, equalizing assets with liabilities communicates the balancing concept.

In accounting, what a business owns (assets) must be matched by the claims against those assets. Those claims come from creditors (liabilities) and, in a complete picture, the owner’s investment (equity). Here, the idea being tested is that the resources on hand are financed by obligations to others, which is shown by assets equaling liabilities in this simplified representation. The other options mix up the relationships: revenues are income, not a funding source; equity is a form of claim but isn’t the sole or direct equality with assets; and reversing the sides would misstate who owns or owes what. In a full balance sheet, you’d still have assets = liabilities + equity, but among these choices, equalizing assets with liabilities communicates the balancing concept.