If total liabilities increased by $30,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period?

Question

Quizplus · Accepted Answer

According to the accounting equation, Assets = Liabilities + Stockholders' Equity. Therefore, if total liabilities increased by $30,000 and stockholders' equity increased by $20,000, then total assets must also increase by the same amount ($30,000 + $20,000 = $50,000) in order to balance the equation. Therefore, the correct answer is D, a $50,000 increase.

If Total Liabilities Increased by $30,000 and Stockholders' Equity Increased