Question

If total liabilities decreased by $26,185 during a period of time and owner's equity increased by $33,571 during the same period, the amount and direction (increase or decrease) of the period's change in total assets would be a a.$7,386 increase b.$26,185 increase c.$7,386 decrease d.$26,185 decrease

Answer 1

Option (a) $7,386 increase

Step-by-step explanation:

Data provided in the question:

Change in total liabilities = - $26,185 [negative sign depicts decrease]

Change in equity = $33,571

Now,

Total Assets = Total Liabilities + Total Equity

Thus,

Change in total assets = Change in total Liabilities + Change in total Equity

or

Change in total assets = - $26,185 + $33,571

= $7,386 [positive value depicts increase]

Hence,

Option (a) $7,386 increase