The resources owned by David's Spa and Salon total $148,000. The total amount of debt that it owes to others is $87,000. Which of the following describes David's Spa and Salon?
A) owners' equity is $61,000
B) liabilities are $148,000
C) liabilities are $61,000
D) owners' equity is $235,000

Question

Quizplus · Accepted Answer

The resources owned by David's Spa and Salon include both owners' equity and liabilities. Thus, to find the owners' equity, we need to subtract the liabilities from the total resources owned:
Total resources owned - liabilities = owners' equity
$148,000 - $87,000 = $61,000
Therefore, choice A is the correct answer.

The Resources Owned by David's Spa and Salon Total $148,000