[susannwv]

How do you calculate what would happen to assets during a current year if liabilities decrease and the owners equity increased?

[morgaine300]

Is it giving you numbers, or just asking as a general idea?

You have to keep your accounting equation in mind:
Assets = Liabilities + Equity
They are wanting to see if you understand this equation.

If liabilities decreased and equity increased by the same amount, nothing would happen to assets. That would just net out the right side of the equation. What you need to look at is the net of what happened on the right side.

For instance, liabilities do -10,000 and equity does +4000, the right side has a NET -6000. So the left side (assets) must do a -6000. But if equity increases more than liabilities decrease, the net effect will be an increase.

That's the basic idea of how you figure that out. If you have the beginning and ending balances, just set them up in your equation and find the missing number.