If total liabilities increased by $22,500, then
A) assets must have increased by $22,500.
B) only shareholders' equity must have increased by $22,500.
C) assets must have increased by $22,500, or shareholders' equity must have decreased by $22,500.
D) assets and shareholders' equity must have both decreased by $22,500.

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Shareholders' Equity), if liabilities increase by $22,500, either assets must increase by the same amount or shareholders' equity must decrease by that amount to maintain the balance.

If Total Liabilities Increased by $22,500, Then