Multiple Choice
Which of the following correctly expresses the basic accounting equation?
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1. Introduction to Accounting
Fundamental Accounting Equation
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If a company has liabilities of \$65,000 and equity of \$25,000, what are the company's assets worth?
A
\$25,000
B
\$40,000
C
\$60,000
D
\$90,000
Verified step by step guidance1
Understand the accounting equation: Assets = Liabilities + Equity.
Identify the given values: Liabilities = \$65,000 and Equity = \$25,000.
Substitute the given values into the accounting equation: Assets = \$65,000 + \$25,000.
Perform the addition to find the total assets: Add \$65,000 and \$25,000.
Conclude that the company's assets are worth the sum of its liabilities and equity.
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