If the Liabilities of a Company Increased $74,000 During a Period

question 8

Multiple Choice

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

• A) None of the above.
• B) Assets would have decreased $19,000.
• C) Assets would have increased $55,000.
• D) Assets would have decreased $55,000.
• E) Assets would have increased $19,000.

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Definitions:

Consumer Income

The total income that consumers have available to spend on goods and services, after taxes and other deductions.

Normal Goods

Goods for which demand increases as consumer income rises, and decreases as consumer income falls.

Income Elasticity

A measure of how the demand for a good or service changes in response to changes in consumers' income.

Inferior Good

A type of good for which demand decreases when the income of the consumer increases, inversely related to consumer income.