1. if assets increase by $80,000 and liabilities decrease by $16,000 ? a. effect
ID: 2434434 • Letter: 1
Question
1. if assets increase by $80,000 and liabilities decrease by $16,000 ?a. effect on owners' eguity cannot be determine
b. increase must have been $64,000
c. increase must have been $96,000
d. owners' equity must have increased by $96,000
e. none of the above
1. if assets increase by $80,000 and liabilities decrease by $16,000 ?
a. effect on owners' eguity cannot be determine
b. increase must have been $64,000
c. increase must have been $96,000
d. owners' equity must have increased by $96,000
e. none of the above
Explanation / Answer
According to the Accounting Eqution:Total Assets = [Total Liabilities + Total Stockholder's Equity]
If Assets increases by $80,000 and liabilities decreases by $16,000 ; the owner's equity must have increased by $96,000. Hence, the right answer is Option
(d) owner's equity must have increased by $96,000.
Total Assets = $80,000
[$80,000] = [$96,000 - $16,000]
[$80,000] = [$80,000]
Total Assets ($80,000) = Total Liabilities + Stockholder's Equity ($80,000)
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