Scott Corp. ,an apparel company,has total assets worth $8,500.The owners' initial investment in Scott Corp.stood at $4,000,and profits that were not paid out to owners over time was at $2,000.Calculate the total liabilities.
A)$10,500
B)$6,500
C)$4,500
D)$2,500

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Equity. Here, Equity is the sum of the initial investment ($4,000) and retained earnings ($2,000), totaling $6,000. Therefore, Liabilities = Assets - Equity = $8,500 - $6,000 = $2,500.