An organization's balance sheet indicates that the total asset amount and the total capital stock amount remained unchanged from one year to the next, and no dividends were declared or paid. However, the organization reported a loss of $200,000. Which of the following describes the most likely year-over-year change to the organization's total liabilities and total stockholder equity?
A) The total liabilities and total stockholder equity both increased.
B) The total liabilities and total stockholder equity both decreased.
C) The total liabilities decreased, and the total stockholder equity increased.
D) The total liabilities increased, and the total stockholder equity decreased.

Question

Quizplus · Accepted Answer

The organization reported a loss, which would decrease retained earnings, a component of stockholder equity. Since total assets remained unchanged, an increase in liabilities would offset the decrease in stockholder equity.

An Organization's Balance Sheet Indicates That the Total Asset Amount