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If total liabilities decreased by 14,000 during a period of time and stockholders’ equity in creased by 6,000?
6. If total liabilities decreased by 14,000 during a period of time and stockholders’ equity in creased by 6,000 during the same period, then the amount and direction (increase or decrease) of the period’s change in total assets is a (n)
a. 14,000increase.
b. 20,000increase.
c. 8,000decrease.
d. 8,000increase.
e. None of the options listed
1 Answer
- PrivateBankerLv 79 years agoFavorite Answer
L + E = A also...change in L + change in E = change in A...
(14,000) + 6000 = (8000)<<answer is C.
Demonstration:
Begin:
Assets: 200
Liabs: 150
Equity: 50
Then....
If L is reduced by 14: L=136
If E is increased by 6: E = 56
so A must equal: 136 + 56 = 192...versus previous bal 200 = a decrease of 8.
(14) + 6 = (8), alternatively, assets(8) - liabs(14) = 6...remember minus a negative is a plus....(8) + 14 = 6
