On January 1, 2013, a company reported assets of $1,000,000 and liabilities of $600,000. During 2013, assets decreased by $100,000 and Stockholders' Equity decreased $200,000. What is the amount of liabilities at December 31, 2013?

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Stockholders' Equity. Initially, Stockholders' Equity is $400,000 ($1,000,000 - $600,000). By the end of 2013, Assets are $900,000 ($1,000,000 - $100,000) and Stockholders' Equity is $200,000 ($400,000 - $200,000). Therefore, Liabilities are $700,000 ($900,000 - $200,000).

On January 1, 2013, a Company Reported Assets of $1,000,000