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. $55,000.00

Answer: (B)

To calculate the owner's equity, you can use the accounting equation, which states that: **Assets = Liabilities + Owner's Equity** In this scenario, the total current assets are given as $150,000 and total liabilities are $240,000. To find the owner's equity, you can rearrange the equation: **Owner's Equity = Assets - Liabilities** Now, substituting in the values: **Owner's Equity = $150,000 - $240,000 = -$90,000.** In this case, the calculation leads to a negative owner's equity of $90,000, indicating that the company's liabilities exceed its assets by this amount. This reflects a financial situation where the company owes more than it owns, which is critical for understanding the company's financial health. Given that this scenario leads to negative equity, none of the provided answer options is correct, including option B. If at any point all calculations and concepts have been understood, you should reflect on the situation where negative equity might indicate other financial implications for the asset and liability relationship within this business.

To calculate the owner's equity, you can use the accounting equation, which states that:

Assets = Liabilities + Owner's Equity

In this scenario, the total current assets are given as $150,000 and total liabilities are $240,000. To find the owner's equity, you can rearrange the equation:

Owner's Equity = Assets - Liabilities

Now, substituting in the values:

Owner's Equity = $150,000 - $240,000 = -$90,000.

In this case, the calculation leads to a negative owner's equity of $90,000, indicating that the company's liabilities exceed its assets by this amount. This reflects a financial situation where the company owes more than it owns, which is critical for understanding the company's financial health.

Given that this scenario leads to negative equity, none of the provided answer options is correct, including option B. If at any point all calculations and concepts have been understood, you should reflect on the situation where negative equity might indicate other financial implications for the asset and liability relationship within this business.