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Questions and Answers
Which one of the following statements is true about the balance sheet equation $A = L + E$?
Which one of the following statements is true about the balance sheet equation $A = L + E$?
- Liabilities and equity must always be equal to assets (correct)
- Assets must always be greater than liabilities and equity
- Equity is the difference between assets and liabilities
- Equity is equal to the sum of assets and liabilities
Which term is synonymous with 'Net Asset'?
Which term is synonymous with 'Net Asset'?
- Equity
- Shareholder's Equity (correct)
- Total Asset
- Liabilities
What is the formula for calculating Shareholder's Equity?
What is the formula for calculating Shareholder's Equity?
- E = A / L
- E = A + L
- E = A - L (correct)
- E = A * L
According to the text, assets are resources controlled by the company as of which date?
According to the text, assets are resources controlled by the company as of which date?
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What is the fundamental balance sheet equation?
What is the fundamental balance sheet equation?
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Study Notes
Balance Sheet Equation
- The balance sheet equation $A = L + E$ states that the total assets of a company are equal to the sum of its liabilities and equity.
Synonym for Net Asset
- 'Net Asset' is synonymous with 'Shareholder's Equity'.
Shareholder's Equity Formula
- Shareholder's Equity is calculated as: Shareholder's Equity = Assets - Liabilities.
Assets Date
- Assets are resources controlled by the company as of a specific date, usually a point in time at the end of an accounting period.
Fundamental Balance Sheet Equation
- The fundamental balance sheet equation is Assets = Liabilities + Equity.
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Description
Test your knowledge on IFRS and IAS in advanced accounting. Assess your understanding of balance sheet concepts and the relationship between assets, liabilities, and equities.
