If the assets of a business increased $9,000 during a period of time and its liabilities increased $5,000 during the same period, equity in the business must have:
A)Decreased $6,000.
B)Increased $14,000.
C)Decreased $14,000.
D)Increased $4,000.
E)Decreased $4,000.

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Equity.
We know that the assets increased by $9,000 and the liabilities increased by $5,000. To find out the change in equity, we can use the accounting equation as follows:
Assets = Liabilities + Equity
$9,000 = $5,000 + Equity
Equity = $9,000 - $5,000
Equity = $4,000
Therefore, equity in the business must have increased by $4,000.

If the Assets of a Business Increased $9,000 During a Period