The Accounting Equation
18 practice questions with explanations — 15 free to try
PassNova has 18 AAT Level 2 Accounting practice questions on The Accounting Equation, each with a clear explanation. A 15-question taster is free with no sign-up; the full bank is part of PassNova Premium. Updated for 2026.
The Accounting Equation: example questions & answers
2 worked examples with answers and explanations below. Try 15 AAT Level 2 Accounting questions free in the browser; the full 18-question The Accounting Equation bank is part of PassNova Premium.
Which of the following correctly states the accounting equation?
- AAssets = Capital − Liabilities
- BAssets = Capital + Liabilities✓
- CCapital = Assets + Liabilities
- DLiabilities = Assets + Capital
Answer: The accounting equation is Assets = Capital + Liabilities. It reflects that everything a business owns is financed either by the owner (capital) or by third parties (liabilities).
A business has assets of £40,000 and liabilities of £15,000. What is the capital?
- A£55,000
- B£25,000✓
- C£15,000
- D£40,000
Answer: Rearranging the accounting equation, Capital = Assets − Liabilities = £40,000 − £15,000 = £25,000.