Questions: Select all that apply Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply. The equation states that Assets = Liabilities + Equity. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The relation of assets, liabilities and equity is reflected in the equation.

The statements that explain how the accounting equation applies to businesses are:

1. The equation states that Assets = Liabilities + Equity.

   • This is the fundamental accounting equation that forms the basis of the double-entry bookkeeping system. It shows the relationship between a company's assets, liabilities, and equity.

2. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners.

   • This statement accurately describes the balance sheet's purpose, which is to show that a company's assets are financed by either debt (liabilities) or the owners' investment (equity).

3. The relation of assets, liabilities and equity is reflected in the equation.

   • This statement is correct as the accounting equation directly illustrates the relationship between these three components.

4. The equation applies to all transactions.

   • This statement is also true because every financial transaction affects at least two of the equation's components, ensuring that the equation remains balanced.

In summary, all the provided statements accurately explain how the accounting equation applies to businesses.