On a balance sheet, if the assets are $760,000 and the liabilities are $530,000, what is the owner's equity?

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BlackTom AI · Accepted Answer

We start by restating the given data to ensure we’re solving the right problem: On a balance sheet, assets are 760,000 and liabilities are 530,000. The question asks for owner’s equity.

First, recall the fundamental accounting equation: Assets = Liabilities + Owner's Equity. Rearranging gives Owner's Equity = Assets − Liabilities.

Option 1: $250,000. This would imply Owner's Equity = 250,000, which would lead to Liabilities + Equity = 530,000 + 250,000 = 780,000, which does not match the provided assets of 760,000. Therefore this is inconsistent with the given numbers and can be ruled out.

Option 2: $1,280,000. If Owner's Equity were 1,280,000, then Liabilities (530,000) + Equity (1,280,000) would total 1,810,000, far exceeding the stated assets of 760,000. This clearly contradicts the basic accounting identity, so this is incorrect.

Option 3: $230,000. Applying the formula: Assets (760,000) − Liabilities (530,000) = 230,000. This aligns exactly with the calculation, and when you add Liabilities (530,000) to Equity (230,000), you get 760,000, matching the asset total. Therefore this option is consistent with the fundamental equation.

Option 4: $1,290,000. Adding Liabilities (530,000) and Equity (1,290,000) would give 1,820,000, which does not equal the stated assets of 760,000. This mismatch indicates an incorrect choice.

In summary, only the calculation Assets minus Liabilities yields a value that preserves the balance sheet equation with the given numbers, so the third option ($230,000) is the one that fits the scenario.

11:709:448:01 FOOD PROD MGMT FINAL Exam - F25- Dec 18- Requires Respondus LockDown Browser

On a balance sheet, if the assets are $760,000 and the liabilities are $530,000, what is the owner's equity?

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