Total assets of a firm are financed with liabilities and shareholders' equity.

Question

Quizplus · Accepted Answer

This statement is true. The total assets of a firm must be financed with either liabilities or shareholders' equity, as these are the two sources of funding available to a company. Both liabilities and shareholders' equity represent claims on the assets of the firm, with liabilities being debt obligations that must be repaid, and shareholders' equity representing the residual claim of owners after all other claims have been satisfied.

Total Assets of a Firm Are Financed with Liabilities and Shareholders