If Total Liabilities Decreased by $25,000 and Owner's Equity Increased

question 15

Multiple Choice

If total liabilities decreased by $25,000 and owner's equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?

• A) $20,000 decrease
• B) $20,000 increase
• C) $25,000 increase
• D) $30,000 increase

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Definitions:

Dividend Announcement

A public statement by a company indicating its intention to distribute earnings to shareholders in the form of dividends.

Reversal Effect

A phenomenon in finance where the performance of stocks or markets reverses direction after a period of significant movement.

Market Trading Data

Information and statistics related to the trading activity in financial markets, including volume, price, and movements of securities.

EMH

Efficient Market Hypothesis, a theory that suggests that financial markets are fully efficient in reflecting information in asset prices.