Which of the following statements regarding the Accounting Equation is INCORRECT? MCQ with Answer and Explanation

Which of the following statements regarding the Accounting Equation is INCORRECT?
A. Assets = Liabilities + Capital
B. Assets = External Liabilities + Internal Liabilities
C. Assets = Capital - Liabilities
D. Assets = External Equities + Internal Equities
Answer: Option C
Solution (By JKSSB Mock Tests)
The correct accounting equation is Assets = Liabilities + Capital. Therefore, Assets = Capital - Liabilities is mathematically and conceptually incorrect.

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Practice More Accountancy and Book Keeping Questions

Question #1
PFMS stands for:
A. Public Fund Monitoring System
B. Public Financial Management System
C. Private Financial Management Scheme
D. Public Finance and Monetary System

Correct Answer: Option B


Explanation:
PFMS is the Public Financial Management System administered by the Department of Expenditure, Ministry of Finance, Government of India.

Question #2
Which of the following statements about GST is/are correct? 1. It is a destination-based consumption tax. 2. It subsumes all central and state indirect taxes. 3. Petroleum products are presently outside GST. 4. The GST Council is a constitutional body.
A. 1, 3 and 4
B. All of the above
C. 1, 2 and 3
D. 2, 3 and 4

Correct Answer: Option A


Explanation:
Statement 2 is incorrect because some taxes like basic customs duty, stamp duty are not subsumed. 1, 3, 4 are correct.

Question #3
The maximum number of partners in a banking partnership is:
A. No limit
B. 50
C. 10
D. 20

Correct Answer: Option C


Explanation:
As per Banking Regulation Act, the maximum number of partners for a banking firm is 10.