If total assets decreased by $88,000 during a period of time and stockholders' equity increased by $71,000 during the same period,then the amount and direction increase or decrease of the period's change in total liabilities is
A)$17,000 increase
B)$88,000 decrease
C)$159,000 increase
D)$159,000 decrease

Question

Quizplus · Accepted Answer

According to the accounting equation, Assets = Liabilities + Stockholders' Equity. If assets decreased by $88,000 and stockholders' equity increased by $71,000, then there must have been a decrease in liabilities of $159,000 in order to balance the equation. Therefore, the correct answer is D) $159,000 decrease.

If Total Assets Decreased by $88,000 During a Period of Time