Question

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:

Answer 1

Answer:

Increase of $30,000

Explanation:

Increase in Company asset- Increase in liabilities

Increase in Company asset =$55,000

Increase in liabilities =$25,000

Hence:

$55,000 -$25,000

=$30,000

Therefore the change in equity of the company must have an increase of $30,000