An increase in total assets:
A) Means that net working capital is also increasing.
B) Requires an investment in fixed assets.
C) Means that shareholders' equity must also increase.
D) Must be offset by an equal increase in liabilities and shareholders' equity.
E) Can only occur when a firm has positive net income.

Question

Quizplus · Accepted Answer

An increase in total assets must be balanced by an equal increase in either liabilities, shareholders' equity, or both, according to the accounting equation (Assets = Liabilities + Shareholders' Equity). This ensures the balance sheet remains balanced.

An Increase in Total Assets