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2 May, 18:10

If the total assets of a business are $107,000 and its liabilities are $75,000, which of the following statements is correct?

a. liabilities are $32,000

b. liabilities are $42,000

c. liabilities are $57,000

d. liabilities are $98,000

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  1. 2 May, 20:41
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    a. liabilities are $32,000

    Explanation:

    Note: In question part $75,000 shall represent equity, as there are only 3 parts of balance sheet assets, equity and liabilities, if assets are given liabilities is what we need to calculate the missing is equity.

    Thus, $75,000 is treated as equity.

    In that case we have,

    Assets = Equity + Liabilities

    $107,000 = $75,000 + Liabilities

    Assets - Equity = Liabilities

    $107,000 - $75,000 = Liabilities

    $32,000 = Liabilities

    Therefore, correct option is

    a. liabilities are $32,000
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