If Assets Are $20,000 and Liabilities Are $8,000, Then Owner's

question 126

Multiple Choice

If assets are $20,000 and liabilities are $8,000, then owner's equity is

• A) $12,000.
• B) $20,000.
• C) $8,000.
• D) indeterminable with just the facts given.

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Definitions:

Supplies

Materials and items used in the day-to-day operations of a business, which may be considered either current assets or expenses.

Contra-Asset

An account that is used to reduce the balance of a related asset account, with the most common example being accumulated depreciation.

Contra-Revenue

An account deducted from gross revenue or sales, which includes returns, allowances, and discounts, ultimately affecting the net revenue reported.

Purchases Discount

A reduction in the price of goods a company buys, typically for paying early or within a specified time period.