Which three components make up the fundamental accounting equation?Multiple select question.expensesassetsincomeliabilitiesowners' equity

Components of the Fundamental Accounting Equation

The fundamental accounting equation is a key principle in accounting that outlines the relationship between a company's assets, liabilities, and owners' equity. In the context of your question about which three components make up this equation, we can identify them as follows:

1. Assets: These are resources owned by a company that have economic value and can provide future benefits. Assets include cash, inventory, property, and equipment.

2. Liabilities: These represent the obligations or debts that a company owes to outside parties. Liabilities include loans, accounts payable, and mortgages.

3. Owners' Equity: This represents the owner's claims on the assets of the business after all liabilities have been deducted. It can also be referred to as net assets and includes capital invested by the owners and retained earnings.

Conclusion

While expenses and income are important components of an income statement and affect owners' equity over time, the three primary components that make up the fundamental accounting equation are assets, liabilities, and owners' equity.