If a company has assets of $4 million and shareholders' equity of $1 million. This company has liabilities closest to:
A) $3 million.
B) $4 million.
C) $5 million.

Question

Quizplus · Accepted Answer

The company's liabilities can be calculated using the accounting equation: Assets = Liabilities + Shareholders' Equity. Given that Assets = $4 million and Shareholders' Equity = $1 million, we can rearrange the equation to find Liabilities = Assets - Shareholders' Equity = $4 million - $1 million = $3 million.

If a Company Has Assets of $4 Million and Shareholders