If total liabilities increased by $15,000 and owner's equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?
A) $20,000 decrease
B) $20,000 increase
C) $25,000 increase
D) $30,000 increase

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Owner's Equity. If liabilities increased by $15,000 and owner's equity increased by $5,000, then the total increase in these two accounts is $20,000. Since both sides of the equation must balance, total assets must also increase by $20,000, making the correct answer choice B, $20,000 increase.

If Total Liabilities Increased by $15,000 and Owner's Equity Increased