Multiple Choice
Which of the following statements about the fundamental accounting equation is FALSE?
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1. Introduction to Accounting
Fundamental Accounting Equation
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If an individual has total assets of \$120 and liabilities of \$45, what is the amount of owner's equity according to the fundamental accounting equation?
A
\$165
B
\$45
C
\$75
D
\$120
Verified step by step guidance1
Understand the fundamental accounting equation: Assets = Liabilities + Owner's Equity.
Rearrange the equation to solve for Owner's Equity: Owner's Equity = Assets - Liabilities.
Substitute the given values into the equation: Assets = \$120 and Liabilities = \$45.
Perform the subtraction operation: Owner's Equity = \$120 - \$45.
The result of the subtraction will give you the amount of Owner's Equity.
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