If total liabilities increased by $15,000 and stockholders' equity increased by $10,000 during a period of time, then total assets is $25,000
On a company's balance sheet, the Accounting Equation can be shown. The entire assets, liabilities, and equity of an organization are shown on the balance sheet at the end of an accounting period.
Total assets must increase by $25,000
Explanation:
Assets = Liabilities + Equity
Assets = $15,000 + $10,000
Assets = $25,000
Assets must always equal Liabilities plus Equity in order for the accounting equation to be correct. Thus, if total liabilities and shareholders' equity have increased during a time, assets must have increased by an amount that is consistent with those increases.
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