Which one of the following is correct? Capital is equal to assets minus liabilities

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Capital is equal to assets minus liabilities

Capital is equal to assets plus liabilities

Assets is equal to liabilities minus capital

Liabilities is equal to capital plus assets

In accounting, the basic equation is:

Assets = Liabilities + Capital

Rearranging this:

Capital = Assets - Liabilities

This represents the owner's equity in the business.

Correct Answer: Capital is equal to assets minus liabilities