Asked by Kayla Ajtay on Mar 10, 2024
Verified
If total liabilities decreased by $60000 and owner's equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?
A) $90000 decrease
B) $30000 decrease
C) $30000 increase
D) $90000 increase
A) $90000 decrease
B) $30000 decrease
C) $30000 increase
D) $90000 increase
Total Liabilities
The aggregate of all debts and financial obligations owed by a company to external entities at any point in time.
Owner's Equity
The residual interest in the assets of a business after deducting its liabilities, representing the owner's claim against the company's assets.
Total Assets
The sum of all assets owned by a company, including current, non-current, tangible, and intangible assets, reflected on the balance sheet.
- Evaluate the consequences of adjustments in liabilities, assets, and owner's equity on the overall fiscal health of a business.
Verified Answer
LD
Lauren Dirks
Mar 10, 2024
Final Answer :
B
Explanation :
The decrease in liabilities ($60,000) and the increase in owner's equity ($30,000) net to a decrease in total assets of $30,000, as assets = liabilities + owner's equity.
Learning Objectives
- Evaluate the consequences of adjustments in liabilities, assets, and owner's equity on the overall fiscal health of a business.