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At the end of the current accounting​ period, account balances were as​ follows: Cash, $26,000​; Accounts​ Receivable, $42,000​; Common​ Stock, $18,000​; Retained​ Earnings, $12,000. Liabilities for the period​ were:

User Melih
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1 Answer

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Answer: Liabilities =$38,000

Explanation: An asset whether tangible or intangible is a source of value to a company examples are Cash, investments, accounts receivables etc

Liabilities are referred to the debts owed to a company or buisness at a particular period eg bank debts, tax owed, wages owed etc.

Equity is the measure of value of a company"s asset eg Common stock, retained earnings, , preferred stock etc.

The three above are related using the equation below

Assets = Liabilities + Equity.

Total Liabilities = Assets - Equity

Total asset = Cash + Account receivables = 26,000+42,000=68,000

Total equity = Common stock + retained earnings = 18,000+12000=30,000

Total liabilities =Total asset -total equity

= 68,000-30,000

= $38,000

User Febin K R
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