The basic accounting equation is
- Assets Liabilities = Owner's Equity
- Assets + Expenses = Liabilities + Equity
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Assets + Liabilities = Owner's Equity
- Revenue - Expenses = Profit
The correct answer is: C
Explanation
Assets + Liabilities = Owner's Equity. This equation is the foundation of double-entry bookkeeping and ensures that a company's financial statements are balanced. Let's break down the equation:
Assets: These are the resources a company owns, such as cash, inventory, property, and equipment. Liabilities: These are the company's debts or financial obligations that need to be repaid.
Owner's Equity (also called Shareholders' Equity): This represents the owners' claim on the company's assets after all liabilities are settled. It's essentially the difference between the company's assets and liabilities.