If Total Liabilities Increased by $30,000 and Stockholders' Equity Increased

question 6

Multiple Choice

If total liabilities increased by $30,000 and stockholders' equity increased by $20,000 during a period of time, then total assets must change by what amount and direction during that same period?

• A) $50,000 decrease
• B) $10,000 decrease
• C) $10,000 increase
• D) $50,000 increase

Understand the principle of aligning decision-making with information availability.

Identify strategies to mitigate agency costs.

Understand the principle of decentralizing decision-making based on information distribution.

Grasp the concept of monitoring and its importance for the principal in evaluating and incentivizing agent performance.

---

Definitions:

Peremptory Challenge

During jury selection, attorneys are given the privilege to dismiss a specified number of would-be jurors with no need to explain their reasoning.

Challenge for Cause

A procedure during jury selection allowing attorneys to exclude a potential juror if they can prove the juror's bias or inability to serve impartially.

Valid Challenge

A legitimate objection or dispute presented against an existing condition or decision, often within a legal context.

Peremptory Challenge

A right in jury selection for the attorneys to reject a certain number of potential jurors without stating a reason.