Final answer:
The accounting equation Assets = Liabilities + Stockholders' Equity represents the financial position of a company. In the given equation for Qualtro Company, the equation is balanced, as $2,600 (assets) = $800 (liabilities) + $1,800 (stockholders' equity).
Step-by-step explanation:
The accounting equation Assets = Liabilities + Stockholders' Equity is used to represent the financial position of a company. The equation states that the total value of a company's assets is equal to the sum of its liabilities and stockholders' equity. In this equation, assets represent what the company owns, liabilities represent what the company owes, and stockholders' equity represents the owners' investment and earnings in the company.
Using the given equation for Qualtro Company, we can see that the company has $400 in cash and $2,200 in land, totaling $2,600 in assets. On the liabilities side, the company has $800 in notes payable. On the stockholders' equity side, the company has $1,200 in common stock and $600 in retained earnings, totaling $1,800. Therefore, the equation is balanced, as $2,600 (assets) = $800 (liabilities) + $1,800 (stockholders' equity).