Fill in the blank: Assets = Liabilities + _____

Revenue

COGS

Cashflow

Equity


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Explanation: The correct answer is Equity. In accounting, the equation Assets = Liabilities + Equity represents the fundamental principle of the balance sheet, which is one of the three primary financial statements used to assess the financial health and performance of a company. Assets refer to resources owned or controlled by the company, such as cash, inventory, equipment, and intellectual property. Liabilities are obligations or debts owed by the company to external parties, such as loans, accounts payable, and accrued expenses. Equity represents the residual interest in the assets of the company after deducting liabilities, often referred to as the net assets or net worth of the company. It reflects the ownership interest of shareholders in the company’s assets and represents the portion of the company’s value attributable to its owners’ contributions and retained earnings. The equation Assets = Liabilities + Equity illustrates the balance between the company’s resources (assets) and the claims against those resources (liabilities and equity), ensuring that the balance sheet remains in equilibrium. Therefore, Equity completes the equation and represents the owners’ stake in the company’s assets, making it the correct answer.

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