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
Correct Answer: Option B
Explanation
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.