Question

A company has current assets of $150,000.00, other assets of $140,000.00, revenue of $590,000.00, expenses of $430,000.00, current liabilities of $105,000.00, and long-term liabilities of $135,000.00. What is the company owner's equity?

A. $45,000.00
B. $50,000.00
C. $210,000.00
D. $55,000.00

Answer 1

Option (B), Owner's equity is calculated by subtracting total liabilities from total assets. The company's total assets are $290,000.00, and total liabilities are $240,000.00, resulting in owner's equity of $50,000.00.

Step-by-step explanation:

The company owner's equity can be calculated using the accounting equation: Assets = Liabilities + Owner's Equity. Given the provided numbers, the total assets equal $150,000.00 in current assets plus $140,000.00 in other assets, resulting in total assets of $290,000.00.

The total liabilities are the sum of current liabilities, $105,000.00, plus long-term liabilities, $135,000.00, equaling $240,000.00. Therefore, we can rearrange the accounting equation to solve for the owner's equity: Owner's Equity = Assets - Liabilities, which would be $290,000.00 - $240,000.00 = $50,000.00.