If total liabilities increased by $69,000 during a period of time and stockholders' equity decreased by $27,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)
A)$69,000 increase.
B)$96,000 increase.
C)$42,000 decrease.
D)$42,000 increase.

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Equity), if liabilities increase by $69,000 and equity decreases by $27,000, the net effect on assets is an increase of $42,000 ($69,000 - $27,000).

If Total Liabilities Increased by $69,000 During a Period of Time