If total assets decreased by $88,000 during a period of time and owner's equity increased by $71,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is
A) $17,000 increase
B) $88,000 decrease
C) $159,000 increase
D) $159,000 decrease

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Owner's Equity. If assets decrease by $88,000 and owner's equity increases by $71,000, liabilities must decrease by $159,000 to balance the equation.

If Total Assets Decreased by $88,000 During a Period of Time