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:

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Equity. 
If assets increase by $9,000 and liabilities increase by $5,000, we can calculate the change in equity:
Equity = Assets - Liabilities 
Equity = ($9,000 + Original Assets) - ($5,000 + Original Liabilities) 
Equity = $4,000 + Original Equity 
Therefore, equity in the business must have increased by $4,000.

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