Question

If total liabilities decreased by $28,314 during a period of time and stockholders' equity increased by $34,383 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a

Answer 1

The period's change in total assets is an increase of $6,069. This is calculated by adding the decrease in liabilities to the increase in stockholders' equity.

Step-by-step explanation:

Based on the information given, we can determine the change in total assets for the period by understanding the accounting equation Assets = Liabilities + Stockholders' Equity.

If liabilities decreased by $28,314 and stockholders' equity increased by $34,383, we know that the assets must have changed in such a way that this equation remains in balance.

To find the change in assets, we simply add the decrease in liabilities to the increase in stockholders' equity, as both of these will affect the total assets.

• Decrease in liabilities: -$28,314 (liabilities are on the right side of the equation, so a decrease means assets must decrease or equity must increase)
• Increase in stockholders' equity: +$34,383 (this would typically mean an increase in assets)

The net change in assets = (-$28,314) + (+$34,383) = $6,069 increase in total assets.

Using a simple T-account, such changes can be kept track of where the assets are on the left side and liabilities and stockholders' equity on the right side. This method helps in visualizing how changes in liabilities and equity impact the total assets of a company.