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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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