If a company has current assets of $150,000.00 and total liabilities of $240,000.00, what is the company owner's equity?

If a company has current assets of $150,000.00 and total liabilities of $240,000.00, what is the company owner's equity?

• A. $45,000.00
• B. $50,000.00
• C. $210,000.00
• D. -$90,000.00

Answer: (D)

The amount of owner’s equity is found using the basic equation: Assets = Liabilities + Owner’s Equity, so Owner’s Equity = Assets − Liabilities. Here, assets are 150,000 and liabilities are 240,000, giving 150,000 − 240,000 = −90,000. A negative equity means liabilities exceed assets by 90,000, indicating negative net worth. If there were additional non-current assets, total assets would be higher and the equity value would be different.

The amount of owner’s equity is found using the basic equation: Assets = Liabilities + Owner’s Equity, so Owner’s Equity = Assets − Liabilities. Here, assets are 150,000 and liabilities are 240,000, giving 150,000 − 240,000 = −90,000. A negative equity means liabilities exceed assets by 90,000, indicating negative net worth. If there were additional non-current assets, total assets would be higher and the equity value would be different.