Practice the fundamental accounting equation (Assets = Liabilities + Equity) with transaction analysis questions. Beginner-friendly free practice with detailed explanations.
Start practising now — it's free Read study guidesThe accounting equation — Assets = Liabilities + Equity — is the bedrock of double-entry accounting. Every transaction must maintain this equation in balance. Understanding how each transaction affects the equation is the first step in developing the debit/credit intuition that accountants use automatically.
Assets are resources providing future economic benefits. Liabilities are obligations to transfer resources to others. Equity is the residual interest — what belongs to owners after all liabilities are settled. When extended: Assets = Liabilities + Contributed Capital + Retained Earnings + Revenues − Expenses − Dividends. Every accounting entry maintains this balance.
Our question engine generates fresh, exam-style questions tailored to this topic — with thorough explanations for every answer, including why wrong options are wrong.
Start practising accounting equation →PrepQBank uses technology to enhance student learning — generating fresh, adaptive questions across every accounting and finance topic. Free to start. No credit card required.
Start free practice →