Accounting · Balance Sheet Equation
If a company experiences a significant decrease in its deferred tax liability due to a legislative reduction in corporate tax rates announced by the government, and no other transactions occur during that period, how is the balance sheet equation specifically affected?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Total assets remain unchanged, total liabilities increase, and total equity decreases.
- 2Total assets decrease, total liabilities decrease, and total equity remains unchanged.
- 3Total assets remain unchanged, total liabilities decrease, and total equity increases.✓
- 4Total assets increase, total liabilities decrease, and total equity remains unchanged.
Correct answer
Total assets remain unchanged, total liabilities decrease, and total equity increases.
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