If equity equals \$100 and liabilities equal \$50, what is the value of assets according to the fundamental accounting equation?

• A. \$150
• B. \$50
• C. \$200
• D. \$100

Answer: (A)

Verified step by step guidance

1. Understand the fundamental accounting equation: Assets = Liabilities + Equity. This equation represents the relationship between a company's resources (assets) and the claims against those resources (liabilities and equity).
2. Identify the values provided in the problem: Equity is \$100, and Liabilities are \$50.
3. Substitute the given values into the fundamental accounting equation. Using MathML, the equation can be expressed as: $\mathrm{Assets}=\mathrm{Liabilities}+\mathrm{Equity}$
4. Perform the addition operation to calculate the value of Assets. In MathML, this step can be expressed as: $50+100$
5. Conclude that the value of Assets is the sum of Liabilities and Equity. This step ensures the equation balances, as required by the fundamental accounting principle.