Bayt.com

Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

If the total liabilities of a business decrease by $5000 what will be the effect on total asset? (assuming the amount of capital remain same) -

A)  Remain constant B)  Decrease by $5000 C)  Increase by $5000D)  Increase by $10,000

Accounting Auditing Financial Reporting Financial Accounting Economics
user-image
Question added by Muhammad Ramzan Tufail ACCA , Assistant Finance Manager , Eltizam Asset Management Group
Date Posted: 2015/07/02
Upvote (0) Views (4) Followers (4) Answers (4) Report Question
Write an Answer
Register now or log in to answer.
kasim Abdul Halik
by kasim Abdul Halik , Payroll Accountant , MEA Resource Solutions (Cupola Group)

Option b is correctLiability decreased will reflect asset (bank / cash) also decreased.

Sam Younes
by Sam Younes , Senior Budget & Financial Analyst , Haulotte BilJax

If Equity remains the same, it will be a DECREASE (Cr) to Total Assets.

lakshminarasimham mallareddi
by lakshminarasimham mallareddi , Manager Finance & Accounts , M/s. Vandana Global Limited, Raipur, Chhattisgarh

Correct Answer is D) Increase by $10000 of total asset as assets equal to liabilities in Balance Sheet .

mehfooz alam khan habib khan
by mehfooz alam khan habib khan , Security Incharge , Landmark Group (Emax)

Option B assets decrease by5000$, assume we paid liabilities by Cheque or by Cash that's why asset will decrease.

Write Your Answer
More Questions Like This

Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.

Get Help