If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period,the assets of the business must have:
A)Decreased $105,000.
B)Decreased $45,000.
C)Increased $30,000.
D)Increased $45,000.
E)Increased $105,000.

Question

Quizplus · Accepted Answer

According to the accounting equation, Assets = Liabilities + Equity. If liabilities increase by $75,000 and equity decreases by $30,000, the assets must increase by $45,000 to balance the equation.

If the Liabilities of a Business Increased $75,000 During a Period