Canadian Securities Course (CSC) Level 1 Practice Exam

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How do you find total equity of a company?

  1. Assets + Liabilities

  2. Liabilities - Assets

  3. Total assets - total liabilities

  4. Total liabilities - total assets

The correct answer is: Total assets - total liabilities

To find the total equity of a company, you need to subtract the total liabilities from the total assets. This calculation is represented by the accounting equation: Total Assets - Total Liabilities = Total Equity. Equity is essentially what's left over for the shareholders after all liabilities have been settled. Therefore, option C, "Total assets - total liabilities," is the correct answer. Option A, "Assets + Liabilities," combines the assets and liabilities together without considering the distinction between the two components, which is crucial in determining equity. Option B and Option D have the calculation in reverse, which would not provide an accurate representation of the total equity of a company.

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