Calculate the missing value (in $) according to the accounting equation.
| Assets | Liabilities | Owner's Equity |
|---|---|---|
| $ \square | $332,400 | $214,000 |
Answer (1)
The accounting equation states: Assets = Liabilities + Owner's Equity.
Substitute the given values: Assets = $332 , 400 + $214 , 000 .
Calculate the sum to find the value of Assets: Assets = $546 , 400 .
The missing value for Assets is $546 , 400 .
Explanation
Understanding the Accounting Equation The accounting equation states that Assets = Liabilities + Owner's Equity. This equation is fundamental in accounting and represents the balance between what a company owns (assets) and what it owes to others (liabilities) and to its owners (owner's equity).
Identifying Given Values We are given the values for Liabilities and Owner's Equity:
Liabilities = $332,400 Owner's Equity = $214,000
Applying the Equation To find the value of Assets, we simply add the Liabilities and Owner's Equity:
Assets = Liabilities + Owner's Equity Assets = $332,400 + $214,000
Calculating Assets Calculating the sum:
A sse t s = 332400 + 214000 = 546400
Therefore, the value of Assets is $546,400.
Final Answer The missing value for Assets is $546,400.
Examples
The accounting equation is used in everyday business to ensure that the balance sheet is, well, balanced! For example, if a company buys a new machine for $50 , 000 (an increase in assets) and pays for it with a loan (an increase in liabilities), the accounting equation remains balanced. Similarly, if a company uses $20 , 000 of its cash (a decrease in assets) to pay off a loan (a decrease in liabilities), the equation still balances. This principle is crucial for financial stability and accurate reporting.
