If total liabilities decreased by $25,000 and shareholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during the same time period?
A)$20,000 increase.
B)$20,000 decrease.
C)$30,000 increase.
D)$30,000 decrease.

Question

Quizplus · Accepted Answer

Total assets = Liabilities + Shareholders' Equity. If liabilities decrease by $25,000 and shareholders' equity increases by $5,000, the net change is a decrease of $20,000 in total assets.

If Total Liabilities Decreased by $25,000 and Shareholders' Equity Increased