Question

If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month, did assets increase or decrease and by how much?

Answer 1

Answer:

The assets should have increased by 34,000 during the same period.

Explanation:

Considering the accounting equation as follows:

Assets = Liabilities + Equity

and given the information that:

liabilities + 55,000

equity       - 21,000

net change in the right side:   34,000

$assets = +55,000 - 21,000 \\assets = +34,000$

The assets should have increased by 34,000 during the same period.