If the Liabilities of a Business Increased $65,000 During a Period

question 30

Essay

If the liabilities of a business increased $65,000 during a period of time and equity in the business decreased $21,000 during the same period, would the assets of the business have increased or decreased? By what amount?

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Definitions:

Constructive Fraud

Conduct that is treated as fraud under the law even when there is no proof of intent to defraud, usually because of the existence of a special relationship or fiduciary duty.

Fraudulent Intent

The deliberate intention to deceive another party for unlawful gain or to deprive a victim of a legal right.

Privity

The relationship between parties that are legally participating in the same transaction or agreement.

Accountant Negligence

A situation where an accountant fails to perform their duties with the required level of care and accuracy, leading to financial loss.