Question

If a firm's assets equal $18,000 and its liabilities equal $7,500, then the owners' equity is _____.

Answer 1

The owners' equity of a firm with assets worth $18,000 and liabilities of $7,500 is calculated by subtracting the liabilities from the assets, resulting in an equity value of $10,500.

Step-by-step explanation:

If a firm's assets equal $18,000 and its liabilities equal $7,500, then the owners' equity can be calculated using the fundamental accounting equation:

Assets = Liabilities + Owners' Equity

To find the owners' equity, we need to rearrange the equation:

Owners' Equity = Assets - Liabilities

So in this case:

Owners' Equity = $18,000 - $7,500

Owners' Equity = $10,500

Therefore, the owners' equity is $10,500.