Question

The Liabilities and Owner's Equity Sections
After the assets section is completed, the liabilities and owner's equity sections for a specific date are recorded. Liabilities are the amount owed by a business. For example, if Forks Gym makes a purchase for a new treadmill at Gym Warehouse and charges it, Forks Gym owes money to Gym Warehouse and it is recorded as a liability on the balance sheet. This liability is recorded as accounts payable, the amount of money owed to the creditors of a business.

The owner's equity section of the balance sheet is the amount left after the total liabilities is subtracted from total assets. This is referred to as the owner's capital, or what the business is worth.

Example Liabilities and Owner's Equity Sections:

Liabilities


Accounts Payable - Gym Warehouse
Accounts Payable - Gym Zone
Total Liabilities

Owner's Equity


Megan Kluxen, Capital
Total Liabilities and Owner's Equity5,000.00
6,100.00




11,100.00


79,000.00
90,100.00
Megan Kluxen, Capital is calculated by taking Total Assets of $90,100 and subtracting Total Liabilities of $11,100.
Example of a Completed Balance Sheet:

Forks Gym
Balance Sheet
For the Month Ended January 31, xxxx
Assets


Cash
Accounts Receivable - Mel Jones
Gym Equipment
Supplies
Total Assets

10,000.00
100.00
75,000.00
5,000.00






90,100.00
Liabilities


Accounts Payable - Gym Warehouse
Accounts Payable - Gym Zone
Total Liabilities

Owner's Equity


Megan Kluxen, Capital
Total Liabilities and Owner's Equity5,000.00
6,100.00




11,100.00


79,000.00
90,100.00
Total Assets = Total Liabilities + Owner's Equity.
Question # 5
Multiple Choice
What are the total liabilities for Forks Gym for January?

Responses

$11,100
$11,100

$79,000
$79,000

$90,100
$90,100

none of the above
none of the above

Answer 1

$11,100

(Accounts payable: $5,000 + $6,100 = $11,100.)