Given $45,000 worth of total assets and a net worth of $25,000, what is the total balance of liabilities?(1 point)

Question

Responses

−$20,000
negative 20,000 dollars

$15,000
$15,000

$20,000
$20,000

$70,000

Answer 1

To determine the total balance of liabilities, we can use the accounting equation:

\[ \text{Assets} = \text{Liabilities} + \text{Net Worth} \]

We are given:

• Total Assets = $45,000
• Net Worth = $25,000

Let \( L \) represent the total liabilities. Plugging in the values into the accounting equation, we get:

\[ 45,000 = L + 25,000 \]

To find \( L \), we can rearrange the equation:

\[ L = 45,000 - 25,000 \] \[ L = 20,000 \]

Thus, the total balance of liabilities is \( 20,000 \).

The correct response is:

$20,000