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

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

Step-by-step 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.