Question

Q 1.25: If total liabilities increased by $95,000 and stockholders' equity increased by $45,000 during a period of time, then total assets must change by what amount and direction during that same period?

Answer 1

Answer:

The total asset are increased by $140,000

Explanation:

As we know that:

Assets = Equity + Liabilities

So if Equity is increased by $45,000 and liabilities are increase by $95,000, then by putting the values in the above equation we have:

Assets = $45,000 + $95,000 = $140,000

The total assets are increased by $140,000 due to the changes in the liabilities and equity changes.