During the most recent fiscal year, Company Z reported its balance sheet with the following selected assets and liabilities: Cash and Cash Equivalents: $250,000 Accounts Receivable: $120,000 Inventory: $80,000 Property, Plant, and Equipment: $300,000 Accounts Payable: $150,000 Short-term Debt: $50,000 Long-term Debt: $200,000 Given this information, what is the impact of the company's total liabilities on its shareholders' equity, assuming the total assets are correctly calculated?

Exam

CFA Level 1

Section

Difficulty

Financial Reporting and Analysis

Total Liabilities Impact on Shareholder Equity

Very Hard Financial Statements Balance Sheet

During the most recent fiscal year, Company Z reported its balance sheet with the following selected assets and liabilities:

Cash and Cash Equivalents: $250,000
Accounts Receivable: $120,000
Inventory: $80,000
Property, Plant, and Equipment: $300,000
Accounts Payable: $150,000
Short-term Debt: $50,000
Long-term Debt: $200,000

Given this information, what is the impact of the company's total liabilities on its shareholders' equity, assuming the total assets are correctly calculated?

Total liabilities exceed shareholder equity by $100,000.

Total liabilities equal shareholder equity.

Total liabilities are less than shareholder equity by $50,000.

Hint

Submitted14.2K

Correct12.1K

% Correct85%