Question

If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? $10,000 increase $20,000 increase $15,000 decrease $10,000 decrease

Answer 1

$10,000 decrease:
Assets = Liabilities + Stockholders' Equity, can be used to determine the answer.
Therefore, change in assets = ($15,000) + $5,000 = ($10,000)

Answer 2

If we take into account the decrease of liabilities by $15,000 and the increase of stockholders’ equity by $5,000 during a set period of time, there should be a $15,000 increase in the total assets during that same period of time.