Question

On June 1, 2004 G takes out a $20,000 Whole Life insurance policy with an Accidental Death and Dismemberment rider. On July 15, 2005 G intentionally overdoses on sleeping pills and takes her own life. What will G's beneficiary receive as a death benefit?

Answer 1

If a business has assets of $200,000 and equity of $125,000, then liabilities must equal $75,000.

Step-by-step explanation:

The accounting equation is Assets = Liabilities + Equity. In this scenario, assets are given as $200,000, and equity is $125,000. To find liabilities, rearrange the equation as Liabilities = Assets - Equity. Substituting the given values, Liabilities = $200,000 - $125,000, resulting in $75,000. This calculation represents the portion of the business's financing provided by external sources (liabilities), with equity representing the owner's stake. Therefore, in this specific case, liabilities would amount to $75,000 to maintain the balance in the accounting equation.