Asked by Michael Kumlien on May 10, 2024
Verified
If Owner's Equity totals $73,000 and Liabilities total $40,000, then Assets owned by a business totals $113,000.
Owner's Equity
The residual interest in the assets of the entity after deducting liabilities, representing what the owners or shareholders own outright in the company.
Liabilities
Financial obligations a company owes to outside parties.
Assets
Resources owned by a business which are expected to provide future economic benefits, such as cash, inventory, property, and equipment.
- Gain an understanding of the core components of the accounting equation (Assets = Liabilities + Owner's Equity).
- Analyze the connection between liabilities and Owner's Equity in assessing the financial stability of an entity.
Verified Answer
KS
Kelby SmithMay 16, 2024
Final Answer :
True
Explanation :
Assets = Liabilities + Owner's Equity, so $40,000 + $73,000 = $113,000.
Learning Objectives
- Gain an understanding of the core components of the accounting equation (Assets = Liabilities + Owner's Equity).
- Analyze the connection between liabilities and Owner's Equity in assessing the financial stability of an entity.