Which option lists all components included in LANCE?

Which option lists all components included in LANCE?

• A. Liabilities, Assets, Net worth, Capital, Equity
• B. Liabilities, Assets, Net worth
• C. Liabilities, Assets, Equity
• D. Liabilities, Net worth, Capital, Equity

Answer: (A)

LANCE is a mnemonic for the five components that are included: Liabilities, Assets, Net worth, Capital, and Equity. Liabilities are what the company owes, Assets are what it owns, Net worth (often called Equity) is the owners’ claim on the business, Capital refers to contributed capital, and Equity represents the residual interest after obligations. The key idea is and always is that all five elements are part of this set, so the list that includes Liabilities, Assets, Net worth, Capital, and Equity covers every component. The other options omit at least one item—for example, one leaves out Capital and Equity, another leaves out Net worth and Capital, and another leaves out Assets. So the full five-item list is the correct one.

LANCE is a mnemonic for the five components that are included: Liabilities, Assets, Net worth, Capital, and Equity. Liabilities are what the company owes, Assets are what it owns, Net worth (often called Equity) is the owners’ claim on the business, Capital refers to contributed capital, and Equity represents the residual interest after obligations. The key idea is and always is that all five elements are part of this set, so the list that includes Liabilities, Assets, Net worth, Capital, and Equity covers every component. The other options omit at least one item—for example, one leaves out Capital and Equity, another leaves out Net worth and Capital, and another leaves out Assets. So the full five-item list is the correct one.