Asked by Mercedes Guevara on Apr 29, 2024
Verified
Cash investment by owner
A) Increase assets, increase liabilities
B) Increase liabilities, decrease owner's equity
C) Increase assets, increase owner's equity
D) No effect
E) Decrease assets, decrease liabilities
F) Decrease assets, decrease owner's equity
Cash Investment
Cash investment refers to funds invested into a business or market with the expectation of generating a financial return.
Accounting Equation
Represents the fundamental relationship in accounting: Assets = Liabilities + Equity, ensuring a balance in a company's financial statements.
Owner's Equity
The residual interest in the assets of the entity after subtracting liabilities, essentially representing the owner's claim against the company's assets.
- Comprehend the impact of financial transactions on the accounting equation.
Verified Answer
ZK
Zybrea KnightMay 02, 2024
Final Answer :
C
Explanation :
When the owner makes a cash investment into the business, it increases the assets (cash) of the business, which in turn increases the owner's equity in the business. There is no effect on liabilities.
Learning Objectives
- Comprehend the impact of financial transactions on the accounting equation.