Which of the following balance sheet equations is INCORRECT? A. Assets minus Current liabilities = Longminusterm liabilities + Shareholders' equity B. Assets = Liabilities + Shareholders' equity C. Assets minus Current liabilities = Longminusterm liabilities D. Assets minus Liabilities = Shareholders' equity

C

Explanation:

This balance sheet equation is incorrect, Assets minus Current liabilities = Longminusterm liabilities

Option C is incorrect because the correct equation is as under:

Assets = Equity + LiabilityEquation1

And

Liabilities = Current Liability + Long term Liability

By putting values in the equation we have:

Assets = Equity + Current Liability + Long term Liability

Now placing Current liabilities on left side would change its sign:

Assets - Current Liability = Equity + Long term Liability

So the option C is incorrect.

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