Use the following to answer
-(Table: Bank Balance Sheet) Based on the table, owners' equity will fall to zero if loan defaults reduce the value of total assets by _____ percent.
A) 10
B) 20
C) 30
D) 40

Question

Use the following to answer  
-(Table: Bank Balance Sheet) Based on the table, owners' equity will fall to zero if loan defaults reduce the value of total assets by _____ percent.
A) 10 
B) 20 
C) 30 
D) 40

Quizplus · Accepted Answer

Owners' equity is the difference between total assets and total liabilities. If loan defaults reduce the value of total assets by 20%, the reduction will equal the amount of owners' equity, causing it to fall to zero.

Use the Following to Answer