If total liabilities decreased by ¥35,000 and equity increased by ¥10,000 during a period of time, then total assets must change by what amount and direction during that same period?
A) ¥45,000 increase
B) ¥25,000 decrease
C) ¥25,000 increase
D) ¥35,000 decrease

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Equity), if liabilities decrease by ¥35,000 and equity increases by ¥10,000, assets must decrease by ¥25,000 to keep the equation balanced.

If Total Liabilities Decreased by ¥35,000 and Equity Increased by ¥10,000