If total liabilities decreased by $46,000 during a period of time and owner's equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets would be a
A) $106,000 increase
B) $14,000 increase
C) $14,000 decrease
D) $106,000 decrease

Question

Quizplus · Accepted Answer

The accounting equation states that Assets = Liabilities + Owner's Equity. If liabilities decrease by $46,000 and owner's equity increases by $60,000, the net change in assets is an increase of $14,000 ($60,000 - $46,000).

If Total Liabilities Decreased by $46,000 During a Period of Time