The accounting equation can be defined as:

The accounting equation can be defined as:

• A. Revenue - Expenses = Income
• B. Liabilities = Assets - Equity
• C. Assets = Liability / Equity
• D. Assets = Liability + Equity

Answer: (D)

In accounting, every asset a company owns is funded either by what it owes to others (liabilities) or by the owner's claim (equity). This relationship is shown on the balance sheet as assets on one side and liabilities plus equity on the other, so the total financing matches the total resources. The standard way to express this is Assets = Liabilities + Equity, which directly communicates how assets are funded. The other options mix up what the equation represents: net income (revenue minus expenses) explains profitability, not how assets are financed. A statement using division (Assets = Liability / Equity) doesn’t reflect any standard funding relationship. And while Liabilities = Assets - Equity is algebraically equivalent to the standard form, the conventional presentation used in accounting is the one that puts assets on the left and liabilities plus equity on the right. So the best answer is the form Assets = Liabilities + Equity.

In accounting, every asset a company owns is funded either by what it owes to others (liabilities) or by the owner's claim (equity). This relationship is shown on the balance sheet as assets on one side and liabilities plus equity on the other, so the total financing matches the total resources. The standard way to express this is Assets = Liabilities + Equity, which directly communicates how assets are funded.

The other options mix up what the equation represents: net income (revenue minus expenses) explains profitability, not how assets are financed. A statement using division (Assets = Liability / Equity) doesn’t reflect any standard funding relationship. And while Liabilities = Assets - Equity is algebraically equivalent to the standard form, the conventional presentation used in accounting is the one that puts assets on the left and liabilities plus equity on the right. So the best answer is the form Assets = Liabilities + Equity.