The equation "Liabilities = Assets - Owner's Equity" is best described as?

The equation "Liabilities = Assets - Owner's Equity" is a foundational principle in accounting and reflects the basic accounting equation. This equation delineates the relationship between assets, liabilities, and owner's equity within a business.

According to accounting principles, assets are everything a company owns that has value, while liabilities represent what the company owes to others. Owner's equity, on the other hand, is the residual interest in the assets of the entity after deducting liabilities. By rearranging the standard accounting equation, which is typically stated as "Assets = Liabilities + Owner's Equity," the equation can be manipulated to emphasize liabilities.

From a conceptual standpoint, this rearrangement is mathematically sound and reflects a true relationship in accounting. Therefore, categorizing this equation as true demonstrates an understanding of how these components interact within the financial framework of an organization.