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      Question

      The fundamental accounting equation, Assets =

      Liabilities + Equity, can be alternatively expressed as:
      A Net Assets = Capital Correct Answer Incorrect Answer
      B Liabilities = Assets - Equity Correct Answer Incorrect Answer
      C Equity = Assets + Liabilities Correct Answer Incorrect Answer
      D Capital = Assets + Liabilities Correct Answer Incorrect Answer

      Solution

      The fundamental equation can be rearranged algebraically. If Assets = Liabilities + Equity, then subtracting Equity from both sides gives Liabilities = Assets - Equity. This represents the claim of creditors on the company's assets after the owners' claim is accounted for.

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