Accounting for IGCSE & O level - Final Statements (Section 3 - No. 39)
What is the effect on the accounting equation if a business owner invests cash into the business?
Assets increase, liabilities decrease
Assets increase, owner's equity increases
Assets decrease, owner's equity decreases
Liabilities and owner's equity both decrease
Paliwanag
When an owner invests cash, assets increase, and so does owner's equity.