If assets are $365,000 and equity is $120,000, then liabilities are:
A) $120,000.
B) $245,000.
C) $365,000.
D) $485,000.
E) $610,000.

Question

Quizplus · Accepted Answer

The equation for the balance sheet is Assets = Liabilities + Equity. Therefore, we can use this equation to solve for liabilities: 
Assets = Liabilities + Equity 
$365,000 = Liabilities + $120,000 
Liabilities = $365,000 - $120,000 = $245,000 
Therefore, the answer is B) $245,000.

If Assets Are $365,000 and Equity Is $120,000, Then Liabilities