Question

If the liabilities of a company increased $110,000 during a period of time and equity in the company decreased $37,000 during the same period, what was the effect on the assets?

Answer 1

Increase of $73,000

Step-by-step explanation:

As we know that

The accounting equation is

Assets = Liabilities + Owner's Equity

So it can be said that

Change in Assets = Change in Liabilities + Change in Owner's Equity

Change in Assets = Increase of $110,000 + Decrease of $37,000

Change in Assets = Increase of $73,000

hence, the impact of the asset is $73,000 and the same is to be considered