Question

In: Finance

At XYZ corporation, if retained earnings are $10,000 and liabilities are $25,000, what is the total asset amount?

At XYZ corporation, if retained earnings are $10,000 and liabilities are $25,000, what is the total asset amount?

-$35,000

-$50,000

-An unknown figure

-None of these is correct

Solutions

Expert Solution

The Option (3) is correct.

 

Explanation:

Total asset amount is the unknown figure. We cannot find out the total asset amount from the given information, because as per the accounting equation

Total assets = Liabilities + Stockholder's equity

 

The above equation can be separated as:

Total assets = Liabilities + Retained earnings + Common stock

So, unless we know the amount of common stock, we cannot find the togtal assets amount.

 

Hence, (3) is correct.

 

Hence, (3) is correct.

Junaid answered 1 year ago
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