If total liabilities decreased by $30,000 during a period of time and stockholders' equity increased by $35,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is a:
A) $65,000 increase.
B) $5,000 increase.
C) $5,000 decrease.
D) $65,000 decrease.

Question

Quizplus · Accepted Answer

The change in total assets is equal to the change in liabilities plus the change in stockholders' equity. In this case, the change in liabilities is a decrease of $30,000 and the change in stockholders' equity is an increase of $35,000. Therefore, the change in total assets is $5,000, which is an increase.

If Total Liabilities Decreased by $30,000 During a Period of Time