Refer to the following financial statements for Crosby Corporation: If Crosby Corporation reported total assets of \$500,000 and total liabilities of \$320,000 at year-end, what is the amount of shareholders' equity?

• A. \$320,000
• B. \$820,000
• C. \$500,000
• D. \$180,000

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the accounting equation, which states that Assets = Liabilities + Shareholders' Equity. This equation is fundamental in financial accounting and helps determine the relationship between these components.
2. Step 2: Rearrange the accounting equation to solve for Shareholders' Equity. The formula becomes: Shareholders' Equity = Assets - Liabilities.
3. Step 3: Identify the values provided in the problem. Crosby Corporation's total assets are \$500,000, and total liabilities are \$320,000.
4. Step 4: Substitute the given values into the formula. Using MathML, the equation is: $\mathrm{Shareholders\text{'}\; Equity}=\mathrm{Assets}-\mathrm{Liabilities}$. Replace 'Assets' with 500,000 and 'Liabilities' with 320,000.
5. Step 5: Perform the subtraction operation to calculate Shareholders' Equity. The result will represent the amount of equity held by shareholders at year-end.