Assuming No Other Changes Except a Decrease in Assets of $20,000

question 37

Multiple Choice

Assuming no other changes except a decrease in assets of $20,000, increase in liabilities of $10,000, and expenses of $60,000, by how much did owners' equity increase or decrease and what were revenues for the period?

• A) Owners' equity increased $30,000; revenues were $90,000
• B) Owners' equity decreased $30,000; revenues were $30,000
• C) Owners' equity increased $10,000; revenues were $70,000
• D) Owners' equity decreased $10,000; revenues were $70,000

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Definitions:

Capital Cost Allowance (CCA)

A tax deduction in Canada that represents a yearly depreciation charge for the cost of assets.

After-Tax Cost Savings

The reduction in expenses that result from deductions on taxes, essentially the net savings after accounting for tax effects.

Salvage Value

The estimated value at which an asset can be sold at the end of its useful life.

Discount Rate

The interest rate used to discount future cash flows to their present value, crucial in calculating the net present value (NPV) of an investment.