In: Finance
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
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.