The correct answer is D. Liabilities = Assets + Capital.
Assets are the resources that a company owns, such as cash, inventory, and equipment. Liabilities are the debts that a company owes, such as accounts payable and loans. Capital is the owner’s equity in a company, which is equal to the assets minus the liabilities.
The equation Assets = Liabilities + Capital is the accounting equation. It is a fundamental principle of accounting that states that the total assets of a company must equal the total liabilities plus the total capital. This equation can be used to calculate the missing value in any of the three categories.
For example, if a company has assets of $100,000 and liabilities of $50,000, then its capital must be $50,000.
The equation Liabilities = Assets + Capital is not correct because it does not take into account the owner’s equity in the company. The owner’s equity is the difference between the assets and the liabilities, and it represents the owner’s claim on the company’s assets.
Therefore, the correct equation is Assets = Liabilities + Capital.