If total liabilities increase by $5,000 then

A. assets decrease by $5,000.

B. stockholders' equity increase by $5,000.

C. assets increase by $5,000, or stockholders' equity decrease by $5,000.

D. assets and stockholders' equity each increase by $2,500.

Question

Julia

Business

19 November, 23:06

If total liabilities increase by $5,000 then

A. assets decrease by $5,000.

B. stockholders' equity increase by $5,000.

C. assets increase by $5,000, or stockholders' equity decrease by $5,000.

D. assets and stockholders' equity each increase by $2,500.

+2

Answers (1)

Know the Answer?

Ramon Hampton · Answer 1

C. assets increase by $5,000, or stockholders' equity decrease by $5,000.

Explanation:

Using Accounting Equation

Asset = Equity + Liabilities

A. - 5000 + 5000 (Equation is not balanced)

B. + 5000 + 5000 (Equation is not balanced)

C. + 5000 + 5000 (Equation is balanced)

-5000 + 5000 (Equation is balanced)

D. + 2500 + 2500 + 5000 (Equation is not balanced)

If total liabilities increase by $5,000 thenA. assets decrease by $5,000.B. stockholders' equity increase by $5,000.C. assets increase by $5,000, or stockholders' equity decrease by $5,000.D. assets and stockholders' equity each increase by $2,500.

If total liabilities increase by $5,000 then

A. assets decrease by $5,000.

B. stockholders' equity increase by $5,000.

C. assets increase by $5,000, or stockholders' equity decrease by $5,000.

D. assets and stockholders' equity each increase by $2,500.