Question

As of December 31, 2015, Calexico Company has assets of $42,000 and stockholders' equity of $20,000. What are the liabilities for Calexico Company as of December 31, 2015?

A) $22,000.
B) $20,000.
C) $42,000.
D) $62,000.

Answer 1

The liabilities for Calexico Company as of December 31, 2015, are $22,000, calculated by subtracting stockholders' equity from total assets.

Step-by-step explanation:

Liabilities represent the debts and obligations of a company. To determine the liabilities for Calexico Company as of December 31, 2015, we need to subtract the stockholders' equity from the total assets. The question involves understanding the basic accounting equation which states that Assets = Liabilities + Stockholders' Equity. For Calexico Company, the total assets are given as $42,000 and the stockholders' equity is $20,000. To find the liabilities, we rearrange the equation as Liabilities = Assets - Stockholders' Equity. Therefore, the liabilities are $42,000 - $20,000, which equals $22,000.