Series 7 Exam Question 296: Answer and Explanation

Question: 296

Which of the following is the balance sheet equation?

• A. assets = liabilities + shareholder's equity
• B. assets + liabilities = shareholder's equity
• C. shareholder's equity + assets = liabilities
• D. None of the above

Correct Answer: A

Explanation:

A. When you look at a corporation's balance sheet, the left-hand side lists all the assets and the right-hand side lists all the liabilities plus the shareholders' equity. The left side and the right side balance out (equal the same amount of money).