Asked by Madeline Lombardo on Jul 06, 2024
Verified
The following items are components of a traditional balance sheet. How much is the total equity of the firm? 
A) $62,500
B) $49,000
C) $93,000
D) $97,000
Total Equity
The total net value owned by shareholders, calculated as total assets minus total liabilities.
Traditional Balance Sheet
A financial statement that provides a snapshot of a company's financial condition at a specific point in time, detailing assets, liabilities, and shareholders' equity.
- Ascertain the terminating equity value of an enterprise through examination of relevant financial data, including profits after tax, dividend disbursements, and stock market activities.
Verified Answer
MB
Mohamud BulleJul 09, 2024
Final Answer :
B
Explanation :
Total equity can be calculated as Assets - Liabilities. From the given traditional balance sheet, we have:
Assets:
Cash = $10,000
Accounts Receivable = $25,000
Inventory = $37,000
Total Assets = $72,000
Liabilities:
Accounts Payable = $10,000
Notes Payable = $13,000
Total Liabilities = $23,000
Equity = Total Assets - Total Liabilities
Equity = $72,000 - $23,000
Equity = $49,000
Therefore, the answer is B.
Assets:
Cash = $10,000
Accounts Receivable = $25,000
Inventory = $37,000
Total Assets = $72,000
Liabilities:
Accounts Payable = $10,000
Notes Payable = $13,000
Total Liabilities = $23,000
Equity = Total Assets - Total Liabilities
Equity = $72,000 - $23,000
Equity = $49,000
Therefore, the answer is B.
Learning Objectives
- Ascertain the terminating equity value of an enterprise through examination of relevant financial data, including profits after tax, dividend disbursements, and stock market activities.