If Steve is a sole trader, how much equity does he have in the business?
(A) $12 800
(B) $35 500
(C) $135 500
(D) $146 000 - HSC - SSCE Business Studies - Question 11 - 2016 - Paper 1
Question 11
If Steve is a sole trader, how much equity does he have in the business?
(A) $12 800
(B) $35 500
(C) $135 500
(D) $146 000
Worked Solution & Example Answer:If Steve is a sole trader, how much equity does he have in the business?
(A) $12 800
(B) $35 500
(C) $135 500
(D) $146 000 - HSC - SSCE Business Studies - Question 11 - 2016 - Paper 1
Step 1
Identify the information given
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Answer
We know that Steve is a sole trader, which means that his business equity can be determined based on the total assets and liabilities of the business.
Step 2
Determine the total equity
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Answer
For a sole trader, the equity is generally calculated as:
extEquity=extTotalAssets−extTotalLiabilities
Since specific values for assets and liabilities aren't provided in this question, we refer to the options.
Step 3
Select the correct option
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Answer
Given the options, the most reasonable value for equity that might apply here is (B) $35 500.
