If Total Liabilities Increased by $18,000 and Shareholders' Equity Increased

question 50

Multiple Choice

If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

• A)$18,000 increase
• B)$21,000 increase
• C)$39,000 decrease
• D)$39,000 increase

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Definitions:

Direct Materials Purchases

The total cost of raw materials bought that are intended to be used in the manufacture of products.

Factory Overhead

All indirect costs incurred during the manufacturing process, excluding direct labor and direct materials.

Capital Expenditures Budget

A plan for a company's spending on fixed assets, such as buildings or equipment, over a period.

Fixed Assets

Long-term tangible assets purchased for business use and not expected to be converted into cash in the short term, such as buildings, machinery, and equipment.