If the Notes Payable balance is $25,000, then the total assets of Gordon, Inc. at December 31, 2011 amount to:
A) $27,500.
B) $152,500.
C) $120,000.
D) $165,000.

Question

Quizplus · Accepted Answer

Since we are given only the Notes Payable as a liability, we cannot directly determine the total assets of the company. However, we can use the basic accounting equation:
Assets = Liabilities + Equity
We know that the only liability is the Notes Payable, so we can assume that the equity is the total assets minus the Notes Payable, or:
Equity = Total Assets - Notes Payable
We are not given any information about equity, so we cannot calculate it directly. However, we do know that the total assets must be greater than the Notes Payable (since equity cannot be negative). Therefore, the only answer choice that is greater than $25,000 is D: $165,000. This is the best choice based on the information provided.

If the Notes Payable Balance Is $25,000, Then the Total