Questions: If total liabilities increased by 9000, then - assets and owner's equity each increased by 4500. - assets must have decreased by 9000. - owner's equity must have increased by 9000. - assets must have increased by 9000, or owner's equity must have decreased by 9000.

If total liabilities increased by 9000, then
- assets and owner's equity each increased by 4500.
- assets must have decreased by 9000.
- owner's equity must have increased by 9000.
- assets must have increased by 9000, or owner's equity must have decreased by 9000.

Transcript text: If total liabilities increased by $\$ 9000$, then assets and owner's equity each increased by $\$ 4500$. assets must have decreased by $\$ 9000$. owner's equity must have increased by $\$ 9000$. assets must have increased by $\$ 9000$, or owner's equity must have decreased by $\$ 9000$.

Solution

Solution Steps

To solve this problem, we need to apply the accounting equation: Assets = Liabilities + Owner's Equity. We analyze how changes in liabilities, assets, and owner's equity affect each other according to this equation.

If liabilities increase by $9000, the equation must remain balanced.
Consider how each option affects the balance of the equation.

Step 1: Understand the Accounting Equation

The accounting equation is given by:

\[ \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \]

We need to determine how changes in liabilities, assets, and owner's equity affect this equation.

Step 2: Analyze Each Option

Option 1: Assets and owner's equity each increased by \$4500.
- New Assets = Initial Assets + 4500
- New Owner's Equity = Initial Owner's Equity + 4500
- New Liabilities = Initial Liabilities + 9000
- Check: $ \text{Initial Assets} + 4500 = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} + 4500 $
Option 2: Assets decreased by \$9000.
- New Assets = Initial Assets - 9000
- New Owner's Equity = Initial Owner's Equity
- New Liabilities = Initial Liabilities + 9000
- Check: $ \text{Initial Assets} - 9000 = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} $
Option 3: Owner's equity increased by \$9000.
- New Assets = Initial Assets
- New Owner's Equity = Initial Owner's Equity + 9000
- New Liabilities = Initial Liabilities + 9000
- Check: $ \text{Initial Assets} = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} + 9000 $
Option 4: Assets increased by \$9000, or owner's equity decreased by \$9000.
- New Assets = Initial Assets + 9000
- New Owner's Equity = Initial Owner's Equity - 9000
- New Liabilities = Initial Liabilities + 9000
- Check: $ \text{Initial Assets} + 9000 = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} - 9000 $

Step 3: Evaluate the Options

Option 1: The equation becomes $ \text{Initial Assets} + 4500 = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} + 4500 $, which simplifies to $ \text{Initial Assets} = \text{Initial Liabilities} + \text{Initial Owner's Equity} + 9000 $. This does not balance.
Option 2: The equation becomes $ \text{Initial Assets} - 9000 = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} $, which simplifies to $ \text{Initial Assets} = \text{Initial Liabilities} + \text{Initial Owner's Equity} + 18000 $. This does not balance.
Option 3: The equation becomes $ \text{Initial Assets} = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} + 9000 $, which simplifies to $ \text{Initial Assets} = \text{Initial Liabilities} + \text{Initial Owner's Equity} + 18000 $. This does not balance.
Option 4: The equation becomes $ \text{Initial Assets} + 9000 = \text{Initial Liabilities} + 9000 + \text{Initial Owner's Equity} - 9000 $, which simplifies to $ \text{Initial Assets} = \text{Initial Liabilities} + \text{Initial Owner's Equity} $. This balances.