If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year,then the change in equity of the company during the year must have been:
A)An increase of $80,000.
B)A decrease of $80,000.
C)An increase of $30,000.
D)A decrease of $30,000.
E)An increase of $25,000.

Question

Quizplus · Accepted Answer

The change in equity can be found by using the accounting equation: Assets = Liabilities + Equity. If assets increased by $55,000 and liabilities increased by $25,000, then equity must have increased by $30,000 ($55,000 - $25,000 = $30,000). Therefore, the answer is choice C, an increase of $30,000.

If the Assets of a Company Increase by $55,000 During