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Sagot :
The liabilities must have declined by $60,000.
The accounting equation states that the assets of a company is equal the sum of the company's liabilities and net worth.
Assets = liabilities + net worth
Assets increased by $100,000 and net worth increased by $40,000. This can be put into the above equation
$100,000 = $40,000 + liabilities
$100,000 - $40,000 = liabilities
Liabilities = $60,000
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