An increase in total assets:
A)means that net working capital is also increasing.
B)requires an investment in non-current assets.
C)means that shareholders' equity must also increase.
D)must be offset by an equal increase in liabilities and shareholders' equity.
E)can only occur when a ﬁrm has positive net income.

Question

Quizplus · Accepted Answer

An increase in total assets must be balanced by an equal increase in the combination of liabilities and shareholders' equity due to the accounting equation: Assets = Liabilities + Shareholders' Equity. This ensures the balance sheet remains balanced.

An Increase in Total Assets