Answer (C) is correct . The equation is based on the proprietary theory. Equity in an enterprise is what remains after the economic obligations of the enterprise are deducted from its economic resources.
Answer (A) is incorrect because The entity concept limits accounting information to that related to a specific entity (possibly not the same as the legal entity).
Answer (B) is incorrect because Fund theory stresses that assets equal obligations (equity and liabilities are sources of assets).
Answer (D) is incorrect because The enterprise concept stresses ownership of the assets; that is, the emphasis is on the credit side of the balance sheet.
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