Question

If total liabilities decreased by $15,000 and stockholders' equity increased by $10,000 during a period of time, then total assets must change by what amount and direction during that same period? A) $25,000 decrease.B) $5,000 decrease.C) $5.000 increase.D) $25,000 increase.

Answer 1

Answer:

The total assets must change by B) $5,000 decrease

Explanation:

hi, remember that:

$Assets=Liabilities+Equity$

If liabilities decrease by $15,000 and equity increases by $10,000...

$Assets=(Liabilities-15,000)+(Equity+10,000)$

$Assets=Liabilities+Equity-5,000$

Therefore, to balance this equation, we have to substract -$5,000 from the assets, therefore, the assets decrease by 5,000, which is B)

Best of luck.