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Homework answers / question archive / Miss Wright, the owner, takes $24,000 from a personal bank account and puts the money in the business checking account
Miss Wright, the owner, takes $24,000 from a personal bank account and puts the money in the business checking account.
What is the effect of this transaction on individual asset accounts, individual liability accounts, and the Owner's Equity account?
Check all that apply.
a. An asset account increases.
b. An asset account decreases.
c. A liability account increases.
d. A liability account decreases.
e. Owner's Equity increases.
f. Owner's Equity decreases.
Answers: a and e.
Explanation
a. An asset account increases: Cash is regarded as part of a company's assets. Since cash is deposited into the business checking account, an asset account increases.
e. Owner's Equity increases: The owner's equity in the business would increase as the owner has invested additional money in the business.
This transaction will have no effect on liabilities.
