Question

During September 2022, Carla Vista Diner’s total liabilities decreased by $69000 and its stockholders’ equity increased by $10000. The company’s total assets must change by what amount and in what direction during that same period?

Answer 1

Answer:

assets reduced by $59,000

Explanation:

To solve the problem we use the accounting formula.

Asset= Total liabilities + owner's equity

Since we are dealing with change in asset, liability, and equity

Change in asset = change in liability + change in owner's equity

Change in asset= -69,000 + 10,000

Change in asset= - 59,000

This implies that the company's assets reduced by $59,000