If a company has assets of $60,000 and shareholders' equity of $30,000, then its liabilities must be $90,000.

Question

Quizplus · Accepted Answer

The equation for the balance sheet is Assets = Liabilities + Shareholders' Equity. Rearranging this equation, we get Liabilities = Assets - Shareholders' Equity. Using the numbers given in the statement, we get Liabilities = $60,000 - $30,000 = $30,000. Therefore, the statement is false.

If a Company Has Assets of $60,000 and Shareholders' Equity