Question

Your boss wants to know where the business stands overall. On the Balance Sheet, the company has 100,000 in assets, and 30,000 in liabilities. What is the company's equity?

Answer 1

The company's equity is calculated by subtracting its liabilities ($30,000) from its assets ($100,000), which results in an equity of $70,000.

Step-by-step explanation:

If a company has $100,000 in assets and $30,000 in liabilities, we can determine the company's equity by calculating the difference between these two amounts. The equity of a company represents the net worth of the company and is what the owners effectively own. It is calculated as:

Equity = Assets - Liabilities

Therefore, the company's equity would be:

$100,000 (Assets) - $30,000 (Liabilities) = $70,000 (Equity)

This means that the business's overall net worth or equity is $70,000.