Question

If total liabilities decreased by $30,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period?

Answer 1

The total assets must change by $10,000 and decreases during that same period,if total liabilities decreased by $30,000 and stockholders' equity increased by $20,000 .

According to the given question.

Total liabilities decreased by $30,000.

And, stockholders' equity increased by $20,000 during a period of time.

Therefore,

Change in total assets = Total Liabilities Decreased- StockHolders' equity increased

Change in total assets = $30,000 - $20, 000

Change in total assets = $10, 000

Hence, the total assets must change by $10,000 and decreases during that same period,if total liabilities decreased by $30,000 and stockholders' equity increased by $20,000 .

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