Armor Class

Armor Class (AC) is the protective rating of how likely a creature may evade incoming physical attacks, it does not lessen or absorb damage as the damage resistance values do, only prevents it. The lower the number the better.

Effects and the calculation
When a physical attack is attempted, the AC of the target is subtracted from the THAC0 of the attacker, if the resulting number is equal or less than the attacker's d20 roll number, the attack lands on hit; if greater, the attack misses. Critical hits will guarantee the contact no matter the AC value.

All creatures begin with a set base/natural AC value, player characters except monks, start with 10. The number is adjusted by class advancement (and potentially other) alterations to get an effective AC value, as seen in the most upper right line of the inventory menu for PCs.

If an armor is equipped on the creature, the AC number in that line will be changed to the armor's,

but only if armor's AC is better than the creature's effective AC value can the current AC be truly set to the armor's. The current AC value is further modified by modifiers from other item types and magics etc, resulting in a number ranging from 20 to -20, adjusted further by the creature's dexterity score to get the final AC value.

There're also subdivided AC values, governing the actual AC against slashing, crushing, piercing and missile attacks correspondingly, if specified.

Permanent altering

 * Monk betters effective AC values by level
 * Kensai, Swashbuckler, and Dragon Disciple Sorcerer kits boost AC by modifiers instead of altering effective AC
 * Dexterity adjustment
 * Sword and Shield Style proficiency, bonus AC vs. missile when wielding a melee weapon with a shield
 * Test of Selfishness evil route boosts AC by modifiers(?)

Potions

 * Potion of Stone Form

Equipment

 * Armor sets AC if its has better value than creature's effective AC
 * All shields give at least a -1 bonus to AC
 * Equipment offering modifiers: Defender of Easthaven, Twinkle, Dak'kon's Zerth Blade, Cloak of the Sewers, Cloak of Balduran, Montolio's Cloak, Helm of Balduran, Ring of Gaxx, Ring of Earth Control, Rings of Protection, Boots of Phasing, Tzu-Zan's Bracers, Wondrous Gloves, Boots of Avoidance

Spells

 * Arcane spells: Shield_(spell), Ghost Armor, Spirit Armor
 * Divine spells: Barkskin, Defensive Harmony

Abilities

 * Class abilities: Bard songs, Defensive Spin
 * HLAs: Enhanced Bard Song, Evasion, Greater Evasion

Item stack restrictions
Ideally, we want to stack as many AC modifiers from items as possible, but in reality many of the items may not be worn together, they're listed in the following table:

BGWiki writing formats
Due to the inconsistency how AC changes are described in-game, BGW will unify the format by writing -n bonus and +n penalty for changes, and list the exact subdivided AC values (vs. slashing, crushing, piercing and missile) instead of their modifiers.