If total liabilities decreased by 15000 and stockholders equ

If total liabilities decreased by $15,000 and stockholders\' equity increased by $10,000 during a period of time, then total assets must change by what amount and direction during that same period? 1) $25,000 decrease 2) $5,000 decrease 3) $5.000 increase 4) $25,000 increase

Solution

Total assets=Total liabilities+Total equity

Let beginning total liabilities=$100,000

Total equity be=$100,000

Hence beginning Total Assets=(100,000+100,000)=$200,000

Ending total liabilities=(100,000-15000)=$85000

Total equity=(100,000+10,000)=$110,000

Hence ending total assets=(85000+110,000)=$195000

Hence total assets decreases by=(200,000-195000)=$5000(2).