Which accounting equation reflects Assets = Liabilities + Owners' Equity?

The accounting equation, which is expressed as Assets = Liabilities + Owners' Equity, is fundamental in accounting as it illustrates the relationship between a company's resources (assets) and how those resources are financed, either through debt (liabilities) or through the owners' stake (equity). This equation is the foundation of double-entry bookkeeping, ensuring that every financial transaction affects at least two accounts and that the accounting records remain balanced.

The accounting equation signifies that what a company owns (assets) is financed by what it owes (liabilities) plus the investment made by its owners (equity). This relationship is essential for preparing financial statements, validating the integrity of the balance sheet, and analyzing the financial position of an entity.

In contrast, the financial equation generally refers to various relationships in finance but does not specifically denote this fundamental accounting relationship. Similarly, the equity equation is not recognized as a standard term within accounting practices and does not encompass the complete scope of the assets and liabilities. The double-entry equation is related to the principle behind the balanced nature of accounting transactions but lacks the explicit definition provided by the accounting equation itself. Thus, the accounting equation specifically denotes the critical relationship among assets, liabilities, and owners' equity, making it the correct choice.