If the liabilities of a business increased $8,000 during a period of time and equity in the business decreased $4,000 during the same period, the assets of the business must have
A) Decreased $12,000
B) Decreased $4,000
C) Increased $12,000
D) Increased $4,000
E) Increased $6,000

Question

Quizplus · Accepted Answer

According to the accounting equation (Assets = Liabilities + Equity), if liabilities increase by $8,000 and equity decreases by $4,000, assets must increase by $4,000 to balance the equation.

If the Liabilities of a Business Increased $8,000 During a Period