Multiple Choice
The balance sheet is structured around which fundamental accounting equation?
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1. Introduction to Accounting
Fundamental Accounting Equation
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A company has liabilities of \$25,000 and assets of \$35,000. What is the company's equity?
A
\$10,000
B
\$20,000
C
\$30,000
D
\$60,000
Verified step by step guidance1
Understand the accounting equation: Assets = Liabilities + Equity.
Identify the given values: Assets = \$35,000 and Liabilities = \$25,000.
Rearrange the accounting equation to solve for Equity: Equity = Assets - Liabilities.
Substitute the given values into the equation: Equity = \$35,000 - \$25,000.
Calculate the result to find the company's equity.
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