Which of the following statements is NOT true?
A) If total assets decreased by $30 000 during the period and shareholders' equity decreased by $20 000, liabilities decreased by $10 000 for the period.
B) If total assets decreased by $50 000 during the period and shareholders' equity decreased by $30 000, liabilities decreased by $80 000 for the period.
C) If the total assets owned by a company were $80 000 and shareholders' equity totalled $35 000 for the period, liabilities are $45 000.
D) If total assets increased by $45 000 for the period and liabilities decreased by $20 000, shareholders' equity increased by $65 000.

Question

Quizplus · Accepted Answer

The statement in option B violates the accounting equation which states that Assets = Liabilities + Shareholders' Equity. If total assets decreased by $50,000 and shareholders' equity decreased by $30,000, the corresponding decrease in liabilities would be $20,000, not $80,000. Options A, C, and D are all true and follow the accounting equation.

Which of the Following Statements Is NOT True