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26 August, 13:41

A company’s year-end comparative statement of financial position reflects the following changes from the prior year: cash increased by $40,000, total liabilities increased by $32,000, and all other assets decreased by $65,000. Which of the following statements is correct regarding the current-year change in the company’s stockholders’ equity?

A. It increased by $25,000.

B. It increased by $105,000.

C. It decreased by $32,000.

D. It decreased by $57,000.

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  1. 26 August, 15:00
    0
    D. It decreased by $57,000.

    Explanation:

    Given that

    Cash increased = $40,000

    Total liabilities increased = $32,000

    Other asset decreased = $65,000

    We know that

    Total assets = Total liabilities + stockholder equity

    where,

    Total assets = - $65,000 + $40,000

    = - $25,000

    So,

    -$25,000 = $32,000 + stockholder equity

    So, the stockholder equity would be

    = - $25,000 - $32,000

    = - $57,000
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