If the total value of assets remains unchanged but the addition to retained earnings is positive, then total liabilities must have decreased.

Question

Quizplus · Accepted Answer

If the total value of assets remains unchanged and the addition to retained earnings is positive, it means that the company has generated more revenue than it has spent. This would result in an increase in the company's net income, which would in turn lead to an increase in retained earnings. Since the total value of assets remains unchanged, the increase in retained earnings must be offset by a decrease in total liabilities.

If the Total Value of Assets Remains Unchanged but the Addition