If total assets are $321,000 and total liabilities are $160,500, what is equity?

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Multiple Choice

If total assets are $321,000 and total liabilities are $160,500, what is equity?

Explanation:
Equity is what remains for the owners after all liabilities are paid from the assets. In the accounting equation, Assets = Liabilities + Equity, so Equity = Assets − Liabilities. With 321,000 in assets and 160,500 in liabilities, the calculation is 321,000 − 160,500 = 160,500. The other numbers wouldn’t balance the equation: 321,000 would imply zero liabilities, 0 would leave no equity, and 160,000 isn’t the correct remainder after subtracting 160,500.

Equity is what remains for the owners after all liabilities are paid from the assets. In the accounting equation, Assets = Liabilities + Equity, so Equity = Assets − Liabilities. With 321,000 in assets and 160,500 in liabilities, the calculation is 321,000 − 160,500 = 160,500. The other numbers wouldn’t balance the equation: 321,000 would imply zero liabilities, 0 would leave no equity, and 160,000 isn’t the correct remainder after subtracting 160,500.

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