If total liabilities increased by $14,000 during a period of time and owner's equity decreased by $6,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)
A) $14,000 increase.
B) $20,000 increase.
C) $8,000 decrease.
D) $8,000 increase.

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Owner's Equity), if liabilities increase by $14,000 and owner's equity decreases by $6,000, the net effect on assets is an increase of $8,000.

If Total Liabilities Increased by $14,000 During a Period of Time