In financial accounting of a chemical plant, which of the following relationship is invalid ?
Correct answer: D. Assets = capital
- A. Assets = equities
- B. Assets = liabilities + net worth
- C. Total income = costs + profits
- D. Assets = capital
Explanation
The accounting identity is Assets = Liabilities + Net worth, while total income equals costs plus profit. Assets are not generally equal to capital alone because liabilities may also finance them.
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