The FastForward Company balance sheet shows cash $5,000, accounts receivable $7,000, office equipment $3,000, and accounts payable $4,000. What is the amount of equity? a$12,000 b$15,000 c$11,000 d$1,000
Question
The FastForward Company balance sheet shows cash 7,000, office equipment 4,000. What is the amount of equity? a15,000 c1,000
Solution
To calculate equity, you need to subtract the company's total liabilities from its total assets.
In this case, the total assets are the sum of cash, accounts receivable, and office equipment. So, 7,000 (accounts receivable) + 15,000.
The total liabilities are the accounts payable, which is $4,000.
So, the equity is 4,000 (total liabilities) = $11,000.
So, the answer is c$11,000.
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