Define assets, liabilities, and equity with examples.

• A. Assets are resources (cash, inventory); Liabilities are obligations (loans, payables); Equity is owners’ claims (retained earnings, stock).
• B. Assets are debts; Liabilities are assets; Equity is cash on hand.
• C. Assets are owner's claims; Liabilities are assets; Equity is future revenue.
• D. Assets are revenue accounts; Liabilities are expense accounts; Equity is balance.

Answer: (A)

The basic idea is to distinguish what a business owns, what it owes, and what remains for the owners after debts are paid. Assets are resources the company controls that will bring future benefits, like cash, inventory, accounts receivable, or equipment. Liabilities are obligations to outside parties that the company must settle in the future, such as loans payable or accounts payable. Equity represents the owners’ claim on the assets after all liabilities are covered—things like contributed capital and retained earnings.

So the correct description matches these ideas: assets as resources (cash, inventory, etc.), liabilities as obligations (loans, payables), and equity as owners’ claims (retained earnings, stock). The other notions mix up these roles, for example treating assets as debts or equity as cash, which doesn’t fit how the relationship between assets, liabilities, and owners’ interests actually works.