the firm's total liabilities & equity is $2,000,000.
Given,
total current assets = $1,200,000
long-term assets = $800,000
total current liabilities = $500,000
Using the Accounting equation:
Assets = Liabilities + Equity
Now, substituting the values in the above equation.
Also. remember total assets include both current and long term assets.
Therefore, $1,200,000 + $800,000 = Liabilities + Equity
Liabilities + Equity = $2,000,000
The entire assets of a corporation are equal to the sum of its liabilities and shareholders' equity, according to the accounting equation.
Hence, the firm's total liabilities & equity is $2,000,000.
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