If Total Liabilities Decreased by $40000 and Owner's Equity Increased

question 130

Multiple Choice

If total liabilities decreased by $40000 and owner's equity increased by $30000 during a period of time then total assets must change by what amount and direction during that same period?

• A) $50000 decrease
• B) $10000 decrease
• C) $10000 increase
• D) $50000 increase

---

Definitions:

Partial Hedge

A risk management strategy that does not fully offset the potential losses from an exposure, covering only a portion of the risk.

Equity Accounting

A method of accounting whereby an investor records its investment in an associate company at initial cost and subsequently adjusts the carrying amount for its share of the earnings and losses of the associate.