If total liabilities increased by $16,000 and the assets increased by $20,000 during the accounting period, what is the change in the owner's equity amount?
A) Increase of $4,000
B) Decrease of $4,000
C) Increase of $20,000
D) Decrease of $16,000

Question

Quizplus · Accepted Answer

Owner's Equity = Assets - Liabilities

Given, total liabilities increased by $16,000 and the assets increased by $20,000.

So, the change in Owner's Equity = change in Assets - change in Liabilities
= $20,000 - $16,000
= $4,000

Hence, the answer is A) Increase of $4,000.

If Total Liabilities Increased by $16,000 and the Assets Increased