The balance sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000. Which of the following statements is correct?
A) Owners' equity equals $182,000.
B) Current assets are worth $32,000.
C) Net income for the period is $32,000.
D) Owners' equity equals $32,000.

Question

Quizplus · Accepted Answer

The balance sheet equation is Assets = Liabilities + Owners' Equity. Therefore, Owners' Equity = Assets - Liabilities, which in this case is $107,000 - $75,000 = $32,000. Option D is correct. Option A is incorrect, as it implies that the company has additional equity of $182,000, which is not reflected in the balance sheet. Option B is incorrect, as it implies that the current assets are worth $32,000 which is wrong. Option C is incorrect, as net income cannot be determined from the balance sheet alone.

The Balance Sheet for Renuvation LLC Shows Assets Totaling $107,000