Answer to Question #182209 in Economics of Enterprise for Asrat

Question

Choose the best answer from the given alternatives & write the choice of the correct letter on the space provided. Make sure that your answer is clearly marked. Use only capital Letters.

1. If total assets increased by $20,000 during a period and total liabilities 

        Increased by $12,000 during the same period, the amount and direction 

        (Increase or decrease) of the periods change in owners’ equity is:

     A. $32,000 increase                              C. $8,000 increase

     B. $32,000 decrease                             D. $8,000 decrease

Answer 1

C. $ 8,000 increase

Total Assets  = Owners’ Equity + Total Liabilities

Owners’ Equity = Total Asset - Total Liabilities

Owners’ Equity = 20,000 - 12,000 = 8,000