If total liabilities decreased by $75,000 and stockholders' equity decreased by $25,000 during a period of time, then total assets must change by what amount and direction during that same period?
A) $100,000 increase
B) $50,000 decrease
C) $100,000 decrease
D) -$50,000 decrease

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Equity), if liabilities decrease by $75,000 and equity decreases by $25,000, the total decrease in assets must be $100,000 to keep the equation balanced.

If Total Liabilities Decreased by $75,000 and Stockholders' Equity Decreased