If total liabilities decreased by $40000 and owner's equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?
A) $50000 decrease
B) $10000 decrease
C) $10000 increase
D) $50000 increase

Question

Quizplus · Accepted Answer

The accounting equation states that Assets = Liabilities + Owner's Equity. If liabilities decrease by $40,000 and owner's equity increases by $30,000, the net change is a decrease of $10,000 in total assets.

If Total Liabilities Decreased by $40000 and Owner's Equity Increased