Question

If the liabilities of a company increased $112,000 during a period of time and equity in the company decreased $38,000 during the same period, what was the effect on the assets?

Answer 1

Answer: Assets increases by $74,000.

Explanation:

Given that,

Liabilities of a company increased = $112,000 during a period of time

Equity in the company decreased = $38,000 during the same period

Assets = Liabilities + Owners' Equity

           = $112,000 + ($38,000)

           = $74,000

Therefore, Assets increases by $74,000.