Which of the following statements is true?
A) If the liabilities owed by a business total $450 000,then the assets also total $450 000.
B) If the assets owned by a business total $500 000,then shareholders' equity also totals $500 000.
C) If the assets owned by a business total $90 000 and liabilities total $50 000,then shareholders' equity totals $40 000.
D) If the assets owned by a business total $90 000 and liabilities total $50 000,then shareholders' equity totals $140 000.

Question

Quizplus · Accepted Answer

Shareholders' equity equals assets minus liabilities. Therefore, in option C, shareholders' equity would be $90,000 - $50,000 = $40,000. This is the only statement that provides all the necessary information to calculate shareholders' equity. Options A and B provide incomplete information, and option D provides incorrect information as the sum of assets and liabilities ($140,000) does not equal shareholders' equity.

Which of the Following Statements Is True