In the casework package file, assets are $310,000 and liabilities are $188,000. What is owner's equity?
Correct Answer
A) $122,000.
Equity equals assets minus liabilities: $310,000 - $188,000 = $122,000.
Why This Is the Correct Answer
Equity equals assets minus liabilities: $310,000 - $188,000 = $122,000.
Why the Other Options Are Wrong
Option B: $188,000.
$188,000. is above the supported result for owner equity; it likely double-counts allowance, uses the wrong unit, or rounds too early.
Option C: $310,000.
$310,000. is above the supported result for owner equity; it likely double-counts allowance, uses the wrong unit, or rounds too early.
Option D: $498,000.
$498,000. is above the supported result for owner equity; it likely double-counts allowance, uses the wrong unit, or rounds too early.
Memory Technique
Measure to assets, adjust for liabilities, then let Reading Balance set the finish line.
Reference Hint
Study anchor (closed-book): memorize Owner equity from CSLB Law and Business Study Guide; California tax and payroll guidance / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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