Miss Wright, the owner, takes $24,000 from a personal bank account and puts the money in the business checking account

Accounting Dec 16, 2020

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.

Expert Solution

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.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote