If Total Liabilities Decreased By $25,000 During A Period Of Time And Owner's Equity Increased By $30,000 During The Same Period, Then The Amount And Direction (Increase Or Decrease) Of The Period's Change In Total Assets Is:

If Total Liabilities Decreased By $25,000 During A Period Of Time And Owner's Equity Increased By $30,000 During The Same Period

Answer Of MCQ

The correct answer is (c). $5000 increase, as from Accounting Equation, decrease in total liabilities (-$25000) plus increase in owner’s equity (+$30000) equal to $5000 increase in total assets during the same accounting period as show below:

      Assets            =     Liabilities      +    Owner’s Equity

As, we know that:

Change In Assets = Change In Liabilities + Change In Owner’s Equity

So, we have:

Change / Increase In Assets  =   -$25000       +        (+$30000)

Change / Increase In Assets  = +$5000

So, total assets increased to $5000 as compared to previous accounting period.

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