If liabilities increase £3,000 during a given period and owner's equity decreases £1,000 during the same period,the assets must have:
A) Increased by £3,000
B) Increased by £2,000
C) Decreased by £3,000
D) Decreased by £2,000

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Owner's Equity), if liabilities increase by £3,000 and owner's equity decreases by £1,000, assets must increase by £2,000 to keep the equation balanced.

If Liabilities Increase £3,000 During a Given Period and Owner's