If total liabilities increased by $31400 and stockholders' equity increased by $19300 during a period of time, then total assets must change by what amount and direction during that same period?Select answer from the options below$50700 decrease$12100 increase$50700 increase$12100 decrease
Question
If total liabilities increased by 19300 during a period of time, then total assets must change by what amount and direction during that same period?Select answer from the options below12100 increase12100 decrease
Solution
The answer is $50700 increase.
Here's the step by step explanation:
The basic accounting equation is Assets = Liabilities + Stockholders' Equity.
If liabilities increased by 19300, then the right side of the equation increased by 19300 = $50700.
In order for the equation to remain balanced, the left side (Assets) must also increase by the same amount. Therefore, total assets must have increased by $50700.
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