If total liabilities increased by $25,000 and shareholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?$25,000 increase$20,000 decrease$30,000 increase$20,000 increaseCalculation: + $30,000 = + 25,000 + $5,000The following amounts are reported in the ledger of Bowers Company: What is the balance in the share capital account?$7,000 credit.$12,000 credit.$12,000 debit.$8,000 debit

We have a simple formula

Assets = Equity + Liabilities

As we know that assets are debit in nature and are on the left side of the equation whereas Equity and liabilities are credit in nature and are on the right side of the equation.

So increase in liabilities by $25000 would increase the assets by the same amount. Suppose we borrowed money from the bank then we have increased our assets by the amount borrowed and the liability that we owe to the bank with the same amount.

$25000 Assets = Equity + $25000 Liability ... Equation 1

The increase in shareholders equity means we have injected cash in the business which is asset in nature, this means the increase in $5,000 in equity will increase the assets with an equal amount.

$5000 Assets = $5000 Equity + Liability ... Equation 2

This means adding equation 1 and 2 we have:

$30000 Assets = $5000 Equity + $25000 Liability ... Equation 3

As our right hand side has been increased by $30000 amount this means that the Assets must increase by $30000 to equal the equation.