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easyMCQCUET Accountancy 2025 27 May Shift 22026Accountancy
1 mark

What is the expanded form of the accounting equation when incorporating revenues and expenses?

  1. A
    Assets = Capital + Liabilities − Income
  2. B
    Assets = Liabilities + Capital + (Revenues − Expenses)
  3. C
    Assets = Capital − Expenses + Income
  4. D
    Assets = Revenues − Liabilities − Capital

Solution & Step-by-step Explanation

The fundamental accounting equation is:

Since revenues increase equity/capital and expenses decrease it, the expanded configuration equation becomes:

Practice this question

Try it yourself before checking the explanation above.

What is the expanded form of the accounting equation when incorporating revenues and expenses?
A
Assets = Capital + Liabilities − Income
B
Assets = Liabilities + Capital + (Revenues − Expenses)
C
Assets = Capital − Expenses + Income
D
Assets = Revenues − Liabilities − Capital

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