Given the balance sheet values, what is total liabilities?

• A. 50,000
• B. 70,000
• C. 120,000
• D. 500,000

Answer: (A)

Total liabilities equal the sum of all obligations the company owes, both short-term (current) and long-term. To find them, add up every liability line item: current liabilities such as accounts payable, short-term debt, accrued expenses, taxes payable, and the current portion of long-term debt, plus long-term liabilities like long-term debt, lease obligations, deferred taxes, and any pension or other post-employment obligations. The total must align with the accounting equation where assets equal liabilities plus equity.

If the balance sheet values for the liabilities section sum to 50,000, that is the total liabilities. The other numbers would require larger sums of those liability items to reach their respective totals.