Question : Which of the following statements is correct?
Option 1: Assets = Funds of outsiders
Option 2: Assets = Liabilities + Shareholders funds
Option 3: Assets = Total funds
Option 4: None of the above
Correct Answer: Assets = Liabilities + Shareholders funds
Solution : The company's significant resources are represented by its assets. Their responsibilities are represented by the liabilities. Liabilities and shareholders' equity both show how a corporation finances its assets.
Hence the correct answer is option 2.