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25 May, 08:15

If total liabilities decreased by $122000 and stockholders' equity decreased by $33000 during a period of time, then total assets must change by what amount and direction during that same period?

1. $155000 increase

2. $89000 decrease

3. $155000 decrease

4. $89000 increase

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Answers (1)
  1. 25 May, 08:37
    0
    Option (3) is correct.

    Explanation:

    Given that,

    Decrease in total liabilities = $122,000

    Decrease in stockholders' equity = $33,000

    Accounting equation is as follows:

    Total assets = Decrease in Total liabilities + Decrease in Stockholders' equity

    = $122,000 + $33,000

    = $155,000 Decrease

    Therefore, the total assets must be decrease by $155,000.
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