If total liabilities decreased by $25,000 during a period of time and owner's equity increased by $30,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is ________
$5,000 increase
To determine the amount and direction of the period's change in total assets, you can use the accounting equation:
Assets = Liabilities + Owner's Equity
Given that total liabilities decreased by $25,000 and owner's equity increased by $30,000, we can assume that these changes are the result of other changes in assets.
To find the period's change in total assets, we need to compare the change in liabilities to the change in owner's equity. In this case:
Change in Total Assets = Change in Liabilities + Change in Owner's Equity
Given that liabilities decreased by $25,000 and owner's equity increased by $30,000, the calculation would be:
Change in Total Assets = (-$25,000) + $30,000
Simplifying this equation:
Change in Total Assets = $5,000
Therefore, the period's change in total assets is an increase of $5,000.