If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?
A) $18,000 increase
B) $21,000 increase
C) $39,000 decrease
D) $39,000 increase

Question

Quizplus · Accepted Answer

According to the accounting equation, Assets = Liabilities + Shareholders' Equity. If liabilities increase by $18,000 and equity increases by $21,000, assets must increase by the sum of these changes, which is $39,000.

If Total Liabilities Increased by $18,000 and Shareholders' Equity Increased