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In a trial balance, if the total assets amount to $100,000 and total liabilities

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Question: In a trial balance, if the total assets amount to $100,000 and total liabilities amount to $60,000, what is the equity?

Options:

  1. $40,000
  2. $60,000
  3. $100,000
  4. $20,000

Correct Answer: $40,000

Solution: 

Equity is calculated as Total Assets - Total Liabilities, which is $100,000 - $60,000 = $40,000.

In a trial balance, if the total assets amount to $100,000 and total liabilities

Practice Questions

Q1
In a trial balance, if the total assets amount to $100,000 and total liabilities amount to $60,000, what is the equity?
  1. $40,000
  2. $60,000
  3. $100,000
  4. $20,000

Questions & Step-by-Step Solutions

In a trial balance, if the total assets amount to $100,000 and total liabilities amount to $60,000, what is the equity?
  • Step 1: Identify the total assets amount, which is $100,000.
  • Step 2: Identify the total liabilities amount, which is $60,000.
  • Step 3: Use the formula for equity, which is Equity = Total Assets - Total Liabilities.
  • Step 4: Substitute the values into the formula: Equity = $100,000 - $60,000.
  • Step 5: Calculate the result: $100,000 - $60,000 = $40,000.
  • Step 6: Conclude that the equity is $40,000.
  • Accounting Equation – The fundamental accounting equation states that Assets = Liabilities + Equity, which is used to determine equity by rearranging the equation.
  • Trial Balance – A trial balance is a statement that lists the balances of all ledgers accounts to ensure that total debits equal total credits.
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