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1 April, 17:52

Liabilities and owner's equity of a company are $150,000 and $30,000, respectively. Determine assets using the accounting equation.

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  1. 1 April, 18:11
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    Assets: 180,000

    Explanation:

    Accounting Equation Formula:

    Assets = Liabilities + Owner's Equity

    The accounting equation shows which resources the company has for the development of its activities and how they are financed. Assets are those mentioned resources, such as cash, bank accounts, inventory, etc. Those assets can be financed by external or internal sources. Liabilities represent external sources, which means, obligations. Instead, Owner's Equity represents internal sources, which means issuing equity shares. As every resource have to be finance either external or internally, the value of the Asset should match the add of Liabilities and Owner's Equity.
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