The correct answer is Stockholder's equity = Assets - Liabilities. According to Kohler "Accountancy refers to the entire body of the theory and process of accounting". In simple words accounting is the act of recording, classifying, and summarising transactions of an organization and interpreting the results. All properties held by a businessman and used without any intention of gaining a profit are called assets for example Cash, Land and Building, Plant and Machinery, etc. The liabilities are the total amount payable by a business entity to outsiders. Some examples of liabilities are creditors, loan payable, etc. Capital or stockholder's equity is the total amount invested by the owner in the business in the form of cash and other assets. The accounting equation always signifies that the total assets of a business are always equal to the total liabilities and owner's equity. The accounting equation is:Stockholder's equity = Assets - Liabilities?.