Final answer:
The correct answer involves using the accounting equation, where Total Assets equals three times the Total Liabilities and is also equal to Total Liabilities plus Total Capital.
Step-by-step explanation:
The correct answer is option Calculating total liabilities and total assets
To determine the total liabilities when it's known that total assets are three times the total liabilities, we first express this relationship algebraically as:
Total Assets = 3 × Total Liabilities.
Additionally, the accounting equation states that Total Assets = Total Liabilities + Total Capital.
Given that the total capital is $400,000, we can substitute into the accounting equation and set it equal to three times the total liabilities:
3 × Total Liabilities = Total Liabilities + $400,000.
Solving for Total Liabilities, we subtract Total Liabilities from both sides:
2 × Total Liabilities = $400,000
Total Liabilities = $400,000 / 2
Total Liabilities = $200,000.
Now we can find the total assets by multiplying the Total Liabilities by 3:
Total Assets = 3 × $200,000
Total Assets = $600,000.
Therefore, the total liabilities are $200,000, and the total assets are $600,000.