The balance sheet is structured around which form of the fundamental accounting equation?

• A. $\mathrm{Assets}=\mathrm{Stockholders’}\mathrm{Equity}-\mathrm{Liabilities}$
• B. $\mathrm{Assets}+\mathrm{Liabilities}=\mathrm{Stockholders’}\mathrm{Equity}$
• C. $\mathrm{Assets}=\mathrm{Liabilities}+\mathrm{Stockholders’}\mathrm{Equity}$
• D. $\mathrm{Revenues}-\mathrm{Expenses}=\mathrm{Net}\mathrm{Income}$

Answer: (C)

Verified step by step guidance

1. Understand that the fundamental accounting equation represents the relationship between a company's resources and the claims on those resources.
2. Recall the standard form of the fundamental accounting equation: \(\text{Assets} = \text{Liabilities} + \text{Stockholders' Equity}\).
3. Recognize that the balance sheet is structured to show this equation, where assets are listed on one side, and liabilities plus stockholders' equity are on the other side.
4. Note that the other given equations, such as \(\text{Assets} = \text{Stockholders' Equity} - \text{Liabilities}\) or \(\text{Assets} + \text{Liabilities} = \text{Stockholders' Equity}\), do not correctly represent the balance sheet structure.
5. Understand that the equation \(\text{Revenues} - \text{Expenses} = \text{Net Income}\) relates to the income statement, not the balance sheet.