If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month,did assets increase or decrease and by how much?

Question

Quizplus · Accepted Answer

According to the accounting equation, Assets = Liabilities + Stockholders' Equity. If liabilities increased by $55,000 and stockholders' equity decreased by $21,000, the net effect on assets is an increase of $34,000 ($55,000 - $21,000).

If the Liabilities of a Company Increased by $55,000 During