The Resources Owned by David's Spa and Salon Total $148,000

question 169

Multiple Choice

The resources owned by David's Spa and Salon total $148,000. The total amount of debt that it owes to others is $87,000. Which of the following is correct?

• A)David's owners' equity is $87,000.
• B)The owners' equity in David's is $61,000.
• C)David's liabilities are $148,000.
• D)The firm's liabilities are $61,000.
• E)The firm has more owners' equity than liabilities.

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Definitions:

Generally Accepted Auditing Standards (GAAS)

A set of guidelines for auditors working on companies' finances, ensuring audits are systematically conducted with integrity, objectivity, and professionalism.

Professional Negligence

Failure of a professional to perform their duties to the required standard of care, resulting in harm to their client.

Auditing Industry

The sector that involves the examination of financial records and statements to ensure accuracy and compliance with standards and regulations.

Restatement Test

A method used in legal analysis to determine how a restated principle or law applies to a specific situation or case.