During an accounting period, total assets decreased by $5m while owners' equity increased by $8m. The change in total liabilities during this period must have been a:
A) $3m increase.
B) $3m decrease.
C) $13m increase.
D) $13m decrease.

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Owners' Equity. If assets decreased by $5m and owners' equity increased by $8m, liabilities must have decreased by $13m to balance the equation.

During an Accounting Period, Total Assets Decreased by $5m While