if a balance sheet shows owners equity of $12 million, current liabilities of $2 million and long-term…

if a balance sheet shows owners equity of $12 million, current liabilities of $2 million and long-term liabilities of $4 million, then what are the total assets of the company?\n\n$14 million\n\n$16 million\n\n$18 million\n\n$6 million

if a balance sheet shows owners equity of $12 million, current liabilities of $2 million and long-term liabilities of $4 million, then what are the total assets of the company?\n\n$14 million\n\n$16 million\n\n$18 million\n\n$6 million

Answer

Explanation:

Step1: Recall the accounting equation

The basic accounting equation is ( \text{Assets} = \text{Liabilities} + \text{Owner's Equity} ). First, we need to find the total liabilities.

Step2: Calculate total liabilities

Total liabilities are the sum of current liabilities and long - term liabilities. Current liabilities are $2 million and long - term liabilities are $4 million. So, total liabilities (= 2 + 4=6) million.

Step3: Calculate total assets

Using the accounting equation, owner's equity is $12 million and total liabilities is $6 million. Then total assets (= 6+12 = 18) million.

Answer:

$18 million