[Dell]

If, during an accounting period, assets increased by $80,000. And owner's equity decreased by $15,000, what change occurred to the total liabilities?

I answered a decreased o f$65,000. But I'm not sure

Help please.

Dell

[CaptainForest]

Note:
Assets = Liabilities + Owner's Equity

Fiscal 2004:
100 = 40 + 60

Fiscal 2005:
180 = ? + 45
Therefore, =Liabilities = 135.

135 is an increase of 95,000 from the previous year.

Therefore, the answer is liabilities increased by $95,000 (if assets go up by 80, and equity is down by 15, liabilities have to go up by 80+15)

[Dell]

Thanks for the explanation.

Dell

[mh34]

If, during an accounting period, assets increased by $80,000. and owner's equity decreased by $15,000, what change occurred to the total liabilities?

I answered a decreased o f$65,000. but I'm not sure

Help please.

Dell

A=L+OE

$80,000=?+$15,000

$80,000-$15,000= $65,000. That means Liabilities increased by $65,000. I don't know where Captain Forest got his numbers? If assets increased, in this problem, then they were purchased on account, and therefore liabilities are increased.

[Dell]

Thanks for explaining it.

Dell

[CaptainForest]

A=L+OE

$80,000=?+$15,000

$80,000-$15,000= $65,000. That means Liabilities increased by $65,000. I don't know where Captain Forest got his numbers? If assets increased, in this problem, then they were purchased on account, and therefore liabilities are increased.

Mh34, you are incorrect.

The answer is liabilities increased by $95,000

Let me try to explain this conceptually:

Assets = Liabilities + Owner's Equity

If Assets INCREASES by 80,000, then (Liabilities + Owner's Equity) must increase by $80,000

Agree?



So If owner's equity DECREASES by 15,000, then liabilities must increase by 95,000 so that (Liabilities + Owner's Equity) increases by 80,000

(Liabilities + Owner's Equity)
95,000 – 15,000 = 80,000

Therefore, liabilities MUST increase by 95,000 in this example.