If total liabilities decreased by $30000 and owner's equity decreased by $15000 during a period of time then total assets must change by what amount and direction during that same period?
A) $45000 decrease
B) $15000 decrease
C) $15000 increase
D) $45000 increase

Question

Quizplus · Accepted Answer

The accounting equation states that Assets = Liabilities + Owner's Equity. If liabilities decrease by $30,000 and owner's equity decreases by $15,000, the total decrease on the right side of the equation is $45,000. To keep the equation balanced, assets must also decrease by $45,000.

If Total Liabilities Decreased by $30000 and Owner's Equity Decreased