You are solvent if your:
A) total liabilities exceed your total assets.
B) total assets exceed your total liabilities.
C) total assets exceed your equity.
D) total liabilities exceed your equity.
E) current liabilities exceed your current assets.

Question

Quizplus · Accepted Answer

Solvency is a measure of the ability of an entity to meet its long-term obligations. It is determined by comparing the total assets of an entity to its total liabilities. If the total assets exceed the total liabilities, the entity is considered solvent. Therefore, choice B is the correct answer as it states that total assets exceed total liabilities.

You Are Solvent If Your