The accounting equation states that:

A Revenue minus expenses equals profit

B Assets equal liabilities plus equity

C Cash equals revenue

D Debits always exceed credits

✓ Correct Answer: Option B

The fundamental accounting equation: Assets = Liabilities + Equity. This is the basis for double-entry bookkeeping and the balance sheet.

💡 Why is B) the correct answer?

The correct answer to the question "The accounting equation states that:" is Option B: Assets equal liabilities plus equity.

The other options — A) Revenue minus expenses equals profit, C) Cash equals revenue, D) Debits always exceed credits — are incorrect for this Pre-MBA Exam Prep question. As explained above: The fundamental accounting equation: Assets = Liabilities + Equity. This is the basis for double-entry bookkeeping and the balance sheet.

📚 About This Pre-MBA Exam Prep Practice Question

This 1-level Pre-MBA Exam Prep question from the Accounting topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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The accounting equation states that:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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