Multiple Choice
A list of the general ledger accounts and their balances at a particular date is a:
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1. Introduction to Accounting
The Financial Statements
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A company's balance sheet shows total assets of \$400{,}000 and total liabilities of \$150{,}000. What is the amount of shareholders' equity?
A
\$550{,}000
B
\$250{,}000
C
\$400{,}000
D
\$150{,}000
Verified step by step guidance1
Understand the accounting equation: Assets = Liabilities + Shareholders' Equity. This equation is fundamental to the balance sheet and helps determine the missing component when two of the three values are known.
Identify the values provided in the problem: Total assets are \$400,000, and total liabilities are \$150,000. Shareholders' equity is the unknown value we need to calculate.
Rearrange the accounting equation to solve for Shareholders' Equity: Shareholders' Equity = Assets - Liabilities.
Substitute the given values into the equation: Shareholders' Equity = \$400,000 - \$150,000.
Perform the subtraction to find the amount of shareholders' equity. This will give you the final value, which represents the residual interest in the company's assets after deducting liabilities.
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