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Question
Name the aggregate of Shareholders’ Funds and Total Debts:
Options
Total Debts
Capital Employed
Total Assets
Non-current Assets
MCQ
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Solution
Total Assets
Explanation:
According to the fundamental accounting equation of a company’s balance sheet, the total equity and liabilities must always equal the total assets. Shareholders’ Funds represent the owners’ equity, while Total Debts encompass all external liabilities, including both long-term and short-term borrowings. When you combine Shareholders’ Funds and Total Debts, you get the aggregate of the entire liabilities side of the balance sheet, which is mathematically identical to the value of Total Assets of the firm.
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