If total assets decreased by $47,000 during a period of time and owner's equity increased by $24,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is:

a. $23,000 increase

b. $47,000 decrease

c. $71,000 decrease

d. $71,000 increase

The correct answer is C

Explanation:

The change in total liabilities is computed using the Accounting Equation as:

Accounting Equation of the Accounts is as:

Assets = Liabilities + Equity

where

The assets decrease by $47,000. So, it will negative

The equity increased by $24,000. So, it will be positive

So,

Putting the values above:

($47,000) = Liabilities + $24,000

($47,000) - $24,00 = Liabilities

Liabilities = - $71,000

Therefore, there is decrease in liabilities by the amount of $71,000