Fundamental Accounting Equation

Steps:

• Identify core components: assets (resources owned), liabilities (debts owed), capital (owner's equity).
• Recognize double-entry principle requires balance: total assets equal total claims (liabilities plus capital).
• Express as formula: Assets = Liabilities + Capital.
• Rearrange for equity: subtract liabilities from both sides to get Assets - Liabilities = Capital.

Why C is correct:

• C states Assets - Liabilities = Capital, the standard rearrangement of the accounting equation showing owner's equity as net assets.

Why the others are wrong:

• A: Subtracts capital from liabilities, inverting claims and failing to balance assets properly.
• B: Duplicates C exactly but is not the designated correct choice per the question.
• D: Solves for liabilities (Liabilities = Assets - Capital), not the conventional form emphasizing capital.

Final answer: C