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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
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Question added by Muhammad Ramzan Tufail ACCA , Assistant Finance Manager , Eltizam Asset Management Group
Date Posted: 2015/07/02
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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.

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