If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

Question

Quizplus · Accepted Answer

The equation Assets = Liabilities + Equity must always hold true. Since liabilities increased by $74,000 and equity decreased by $19,000, the change in assets must be the difference between these two amounts, which is $55,000. Thus, assets increased by $55,000 during the period.

If the Liabilities of a Company Increased $74,000 During a Period