If total liabilities increased by $46,000 during a period of time and stockholders' equity decreased by $18,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)
A) $46,000 increase.
B) $64,000 increase.
C) $28,000 decrease.
D) $28,000 increase.

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Equity), if liabilities increase by $46,000 and equity decreases by $18,000, the net effect on assets is an increase of $28,000.

If Total Liabilities Increased by $46,000 During a Period of Time