Question: Fill in the blank: Assets = Liabilities + _____
- Revenue
- COGS
- Cashflow
- Equity
Explanation
The fundamental accounting equation is Assets = Liabilities + Equity, which shows that a company’s resources are financed by debt or owner investment. RevOps principles use this equation to understand financial positioning and resource allocation. Equity represents the residual interest in the company after liabilities are accounted for. Maintaining this balance ensures accurate financial reporting and informed operational decisions. It provides a foundation for evaluating capital efficiency and supporting growth strategies.
Why the other options are incorrect
A) Revenue is an inflow affecting equity, not part of the basic accounting equation.
B) COGS affects profit, not the direct calculation of assets, liabilities, and equity.
C) Cashflow tracks movements of money, not the balance equation itself.
Source for verification
Balance Sheet Basics
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