Given that a company's balance sheet shows total assets of \$400{,}000 and total equity of \$350{,}000, what is the amount of total liabilities?

• A. \$400{,}000
• B. \$350{,}000
• C. \$50{,}000
• D. \$750{,}000

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the accounting equation, which states that Total Assets = Total Liabilities + Total Equity. This equation is fundamental to the balance sheet.
2. Step 2: Identify the values provided in the problem. Total Assets are \$400,000, and Total Equity is \$350,000. The goal is to calculate Total Liabilities.
3. Step 3: Rearrange the accounting equation to solve for Total Liabilities. The formula becomes Total Liabilities = Total Assets - Total Equity.
4. Step 4: Substitute the given values into the formula. Replace Total Assets with \$400,000 and Total Equity with \$350,000.
5. Step 5: Perform the subtraction operation to find Total Liabilities. The result will be Total Liabilities = \$400,000 - \$350,000.