BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A. Always
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B. Rarely
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C Never
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D. Sometimes
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Detailed explanation-1: -The most basic identity in accounting is that the balance sheet must balance, that is, that assets must equal the sum of liabilities (debts) and equity (the value of the firm to the owner). In its most common formulation it is known as the accounting equation: Assets = Liabilities + Equity.
Detailed explanation-2: -Answer and Explanation: a) The accounting identity is denoted by; Total Assets = Total Liabilities + Equity. b) The implication is that all the figures on the balance sheet have to be balanced.
Detailed explanation-3: -A debit entry increases an asset or expense account. A debit also decreases a liability or equity account. Thus, a debit indicates money coming into an account. In terms of recordkeeping, debits are always recorded on the left side, as a positive number to reflect incoming money.
Detailed explanation-4: -There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time.