Which one of the following represents the expanded basic accounting equation?
select one:
a. assets = revenues + expenses – liabilities
b. assets + dividends + expenses = liabilities + common stock + retained earnings + revenues
c. assets = liabilities + common stock + retained earnings + dividends – revenues – expenses
d. assets – liabilities – dividends = common stock + retained earnings + revenues – expenses

Option B.

Explanation:

Basic accounting equation is

Assets = Liabilities + Equity

where,

Equity = Capital + Retained earnings

Retained earnings = Revenue - Expenses - Dividend

On combining these formula, we get

Assets = Liabilities + Capital + Revenue - Expenses - Dividend

It can be rewritten as

Assets + Dividend + Expenses = Liabilities + Capital + Revenue

Assets + Dividends + Expenses = Liabilities + Common stock + Retained Earnings + Revenues

Therefore, the correct option is B.

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