Which statement best describes the basic accounting equation and how increases in assets are financed?

• A. Liabilities = Assets + Equity; increases in assets are financed by equity.
• B. Equity = Assets - Liabilities; increases in assets are financed by revenue.
• C. Assets = Liabilities + Equity; increases in assets must be financed by increases in liabilities or equity.
• D. Assets = Revenues + Expenses; increases in assets are financed by profits.

Answer: (C)