The Assets of Star Company Are $120,000 and the Total

question 5

Multiple Choice

The assets of Star Company are $120,000 and the total liabilities are $10,000. The equity is ________.

• A) $120,000
• B) $130,000
• C) $10,000
• D) $110,000

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Definitions:

Previous Valid Obligation

A duty or commitment that has been legally recognized and must be fulfilled as previously agreed or contracted.

Novation

The act of replacing an old obligation with a new one, thereby extinguishing the original obligation.

Consideration

In contract law, the benefit or value that each party agrees to give or receive as part of a legal agreement.

Satisfaction

The fulfillment of a need or desire; in a legal context, the discharge of an obligation or debt.