On a statement of financial position, I would expect to see the following equation:

Question

BlackTom AI · Accepted Answer

Examining the question about what you would expect to see on a statement of financial position (the balance sheet), consider what each option represents and where it belongs in financial reporting.
Option 1: 'Revenue – expenses = Profit/Loss' This is a description of the income statement relationship, where revenues minus expenses yield net income (profit or loss). It does not reflect the balance sheet equation or the format of a statement of financial position.
Option 2: 'Time + Effort = Quality' This is a conceptual or managerial notion about performance or product quality, not a financial accounting equation. It has no place in a balance sheet.
Option 3: 'Assets – Liabilities = Owner’s Equity' This matches a rearranged form of the fundamental accounting equation. The standard form is Assets = Liabilities + Owner’s Equity; rearranging gives Assets – Liabilities = Owner’s Equity, which is appropriate for the balance sheet.
Option 4: 'COGS – Operating Expenses = Net Income' This expression resembles a profitability calculation (cost of goods sold and operating expenses feed into net income) but the particular subtraction shown does not correctly compute net income, and it is not a balance sheet presentation.
In summary, the balance sheet reflects a snapshot where assets are equal to the sum of liabilities and owner’s equity, and the rearranged form in Option 3 aligns with that presentation. The other options describe income statement calculations or general concepts that do not appear on the statement of financial position.

VPAB13H3 F LEC01 Final Exam Quiz

On a statement of financial position, I would expect to see the following equation:

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