Question

Practice Question 38 If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? $15,000 decrease $10,000 increase $20,000 increase $10,000 decrease Click if you would like to show Work for this question: Open Show Work Question Attempts: 0 of 1 used SAVE POR LATER SUBMIT ANSWER

Answer 1

Answer : $10000 Decrease

Explanation

Assets = Liabilities + Equity

So, a net decrease in the Liability and equity side will effect in a decrease in asset side also.

For example,

Assets = $50000, Liabilities = $30000 and Equity = $20000

Liability decreases by $15000, New Liability =$30000 - $15000 = $15000

Equity Increases by $5000, New Equity = $20000 + $5000 = $25000

Assets= $15000 + 425000 = $40000 ie a decrease of $10000

Comment if you have any doubts. Please Upvote the answer if you find this helpful. Thankyou.