Question

If total liabilities decreased by $60,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period?

Answer 1

$40,000 decrease

Explanation:

Change in total assets = Total Liabilities Decreased- StockHolders' equity increased

Change in total assets = 60000 - 20000

Change in total assets = $40,000 decrease

So, If total liabilities decreased by $60,000 and stockholders' equity increased by $20,000 during a period of time,then the change in total assets will consist of a decrease of $40,000