If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:
A) Decreased $156,000.
B) Increased $89,000.
C) Decreased $22,000.
D) Increased $22,000.
E) Increased $156,000.

Question

Quizplus · Accepted Answer

The equation for the Balance Sheet is Assets = Liabilities + Equity. If assets increased by $89,000 and liabilities increased by $67,000, we can solve for the change in equity by rearranging the equation:
Assets - Liabilities = Equity
$89,000 - $67,000 = $22,000
Therefore, equity must have increased by $22,000.

If the Assets of a Business Increased $89,000 During a Period