If Total Liabilities Increased by $25,000 and Shareholders' Equity Increased

question 43

Multiple Choice

If total liabilities increased by $25,000 and shareholders' 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:

Liable

Refers to being legally responsible for something, typically requiring compensation or remedy for damages caused.

Misrepresentation

A false statement of fact made by one party to another, which has the effect of inducing that party into the contract.

Ratification

The adoption of a contract or act of another by a party who was not originally bound by the contract or act.

Breach

The violation or infringement of a law, agreement, or code of conduct.