Which of the following expresses the accounting equation?

  • A Capital + assets = liabilities
  • B Assets - liabilities = Capital
  • C Liabilities + Current Assets = Fixed assets
  • D Liabilities - Capital = Current assets
waec 2015accounting

The correct answer is B. Assets - liabilities = Capital

The net working capital formula is calculated by subtracting the current liabilities from the current assets. Here is what the basic equation looks like. Typical current assets that are included in the net working capital calculation are cash, accounts receivable, inventory, and short-term investments.

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