If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:
A) A decrease of $80,000.
B) An increase of $25,000.
C) An increase of $30,000.
D) A decrease of $30,000.
E) An increase of $80,000.

Question

Quizplus · Accepted Answer

The change in equity can be calculated using the accounting equation: Assets = Liabilities + Equity. If assets increase by $55,000 and liabilities increase by $25,000, then equity must have increased by $30,000 ($55,000 - $25,000 = $30,000). Therefore, the answer is C) An increase of $30,000.

If the Assets of a Company Increase by $55,000 During