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Tourism & Hospitality Management QUESTION #1642
Question 1
In the Accounting and Finance for Tourism & Hospitality course, the 'accounting equation' forms the foundation of all financial statements. Which equation correctly represents this fundamental accounting principle?
  • Revenue − Expenses = Net Profit
  • Assets = Liabilities + Owner's Equity✔️
  • Cash Inflows − Cash Outflows = Net Cash Flow
  • Gross Profit − Operating Expenses = EBITDA
Correct Answer Explanation
The Accounting and Finance course (Module 2: Basics of Accounting) identifies the Accounting Equation — Assets = Liabilities + Owner's Equity — as the foundational principle underlying the Balance Sheet (Statement of Financial Position). Every business transaction maintains this equation in balance, forming the basis of double-entry bookkeeping and financial reporting.