17.5.2. Components

Try these first

1. 1.

   What is an asset?

   Hint

   Think about what a business owns.

2. 2.

   What are liabilities?

   Hint

   Consider debts or loans a business may have.

3. 3.

   What are assets?

   • Obligations owed to others
   • Resources owned by the business
   • Owner's claims against assets

   Hint

   Think about what a company possesses.

4. 4.

   True or False: Owner's equity can be negative.

   • True
   • False

   Hint

   Consider scenarios with large debts.

5. 5.

   A company has total assets of $800,000, total liabilities of$600,000, and retained earnings of $100,000. What is the owner's equity?

   Hint

   Use your balance sheet equation.

6. 6.

   If a business has liabilities of $150,000 and owner's equity of$350,000, what are the total assets?

   Hint

   Remember the balance sheet formula.