Question

Machvile Corporation, a robotics company, decides to acquire Chancera Inc., a start-up company that operates within the same industry. To better assess its decision, the management of Machvile Corporation needs to find out the value of Chancera Inc.'s total assets. The management has information regarding Chancera Inc.'s liabilities and stockholders' equity. In this scenario, the management should most likely use the _____ to get the required information.

A. accounting equation
B. profitability index
C. quartic equation
D. liquidity index

Answer 1

Answer:

The management would most likely use here accounting equation to take out the total assets of the Chancera inc.

Explanation:

Accounting equation which is also termed as balance sheet equation , is a formula which helps in telling about the relationship between total assets, liabilities and shareholders equity of a company. The formula that is used is -

Total assets = Total liabilities + Shareholders equity

So in the question , liabilities and shareholders equity is given in the question, so Machvile corporation can use accounting equation formula to take out the total assets.

Answer 2

Answer: In this scenario, the management should most likely use the accounting equation to get the required information.

Accounting equation is known as the base of the double-entry accounting. It displays a a organization's balance sheet where the entire organization's assets equals the sum of the organization liabilities and also shareholders' equity.

∴ Machvile Corporation management should use the accounting equation to get the required information.