This page explains how the game calculates and uses AC.
Calculating AC from Armour
The formula for calculating the actual AC granted by wearing a piece of armour is as follows:
(base AC) * (Armour skill / 22 + 1)
This means that every level in the Armour skill increases a piece of armour's AC by approximately 4.5% of its base AC.
Note that fractional AC from multiple pieces of armour does add! Fractions are not truncated until the contribution from all armour pieces are summed. For example, both a helmet and a pair of gloves have 1 base AC, so at an Armour skill of 12 they each provide 1.55 AC, which is rounded down to 1 AC when worn individually. When worn together, their contributions sum to 3.1 AC, which is rounded down to 3 AC.
Other Sources of AC
All other sources of AC are applied directly to a character's total AC and are not modified by Armour skill whatsoever. These include: