Multiple Choice
Which of the following statements best describes the relationship between business events and the fundamental accounting equation?
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1. Introduction to Accounting
Fundamental Accounting Equation
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
A company has assets totaling \$50,000 and equity of \$20,000. What are their liabilities?
A
\$0
B
\$20,000
C
\$30,000
D
\$70,000
Verified step by step guidance1
Understand the accounting equation: Assets = Liabilities + Equity.
Identify the given values: Assets = \$50,000 and Equity = \$20,000.
Rearrange the accounting equation to solve for Liabilities: Liabilities = Assets - Equity.
Substitute the given values into the rearranged equation: Liabilities = \$50,000 - \$20,000.
Calculate the result to find the value of the liabilities.
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