Amanda's equity is calculated from her assets and liabilities. If total assets are $30,000 and total liabilities are $6,800, what is equity?

Amanda's equity is calculated from her assets and liabilities. If total assets are $30,000 and total liabilities are $6,800, what is equity?

• A. $23,400
• B. $20,400
• C. $23,200
• D. $36,800

Answer: (C)

Equity is what remains after you subtract liabilities from assets. With assets of $30,000 and liabilities of $6,800, equity = $30,000 − $6,800 = $23,200. So the correct amount of equity is $23,200. The other numbers come from incorrect operations (adding liabilities, or subtracting a different amount), which isn’t how equity is calculated.

Equity is what remains after you subtract liabilities from assets. With assets of $30,000 and liabilities of $6,800, equity = $30,000 − $6,800 = $23,200. So the correct amount of equity is $23,200. The other numbers come from incorrect operations (adding liabilities, or subtracting a different amount), which isn’t how equity is calculated.