Answer: Option C
Explanation: In simple words, when the liabilities of a company exceeds its assets then such a situation is called accounting insolvency.
As we all know, as per the accounting equation the assets of a company equals the sum of its liabilities and equity. Therefore, when the liabilities of a company exceeds its assets, its equity or we can say net worth becomes negative.
From the above we can conclude that the correct option is C.
