Final answer:
The correct option regarding the accounting equation is that it forms the basis for the accounting process, representing the balance of assets, liabilities, and owners' equity as Assets = Liabilities + Owners' Equity. b. It forms the basis for the accounting process.
Step-by-step explanation:
Among the options given, the statement that correctly regards to the accounting equation is option b: It forms the basis for the accounting process. The accounting equation is fundamental to the double-entry bookkeeping system and represents the relationship between a firm's assets, liabilities, and owners' equity. Expressed as Assets = Liabilities + Owners' Equity, this equation ensures that a company's balance sheet remains balanced.
Liabilities do not include the resources a business owns, rather, they are the obligations or debts that the company owes to outsiders. Therefore, option c is incorrect as it contradicts the definition of liabilities. Moreover, owners' equity is not accurately described by saving it as the difference between a firm's fixed costs and its variable costs. Owners' equity actually represents the residual interest in the assets of the entity after deducting liabilities, so option d is also incorrect.
Option a is incorrect as well because the accounting equation does not show the relationship between a firm's sales revenue and its expenditures. Rather, this relationship is part of profit calculation and income statement analysis, where revenue and various types of costs are considered to determine the profitability of a company.