If Total Liabilities Increased by $16,000 and the Assets Increased

question 6

Multiple Choice

If total liabilities increased by $16,000 and the assets increased by $20,000 during the accounting period, what is the change in the owner's equity amount?

• A) Increase of $4,000
• B) Decrease of $4,000
• C) Increase of $20,000
• D) Decrease of $16,000

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Definitions:

Patent

An exclusive right granted for an invention, which allows the patent owner to exclude others from making, using, or selling the invention for a certain period of time.

Non-controlling Interest

Equity interest in a subsidiary not held by the parent company, representing a share of the subsidiary’s net assets and profits.

Voting Shares

Shares that give the shareholder the right to vote on company matters, such as elections for the board of directors; instrumental in controlling the company.

Open Market

A market with no barriers to free market activity, where any buyer or seller can trade freely.