Answered: If total assets decreased by $49,016…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

If total assets decreased by $49,016 during a period of time and stockholders' equity increased by $29,140 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is

Expert Solution

Step 1: Define liability, assets and equity

Liability is the obligation on an entity. It is the amount that an entity has to pay to its creditors or suppliers at a future date,

Assets are the resources owned by an entity so as to use them for business operations

Equity represents the ownership of the owners or shareholders in the entity.

Relationship between Assets, Liabilities and Equity

Assets= Liabilities +Stockholders Equity

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