MULTIPLE CHOICE

1. The accounting equation

A. Is used to determine the amount of income earned during the period. B. Is used to determine the amount of liabilities owed.
C. Shows the claims on the entity's asset by both the creditors and owner.
D. Shows the claims on the owner's equity by the creditors.

2. Which of the following derivations is not consistent with the basic accounting equation?

A. Assets less liabilities equal owner's equity.
B. Liabilities equal assets less owner's equity.
C. Liabilities equal owner's equity less assets.
D. Owner's equity equal assets less liabilities.

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