Multiple Choice
Which of the following statements about the fundamental accounting equation is FALSE?
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1. Introduction to Accounting
Fundamental Accounting Equation
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If an individual has total assets of $120 and liabilities of $45, what is the amount of owner's equity according to the fundamental accounting equation?
A
$165
B
$45
C
$75
D
$120
Verified step by step guidance1
Understand the fundamental accounting equation: Assets = Liabilities + Owner's Equity.
Rearrange the equation to solve for Owner's Equity: Owner's Equity = Assets - Liabilities.
Substitute the given values into the equation: Assets = $120 and Liabilities = $45.
Perform the subtraction operation: Owner's Equity = $120 - $45.
The result of the subtraction will give you the amount of Owner's Equity.
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