Question

The accounting equation is in balance if there is a (an)A. increase in liabilities and an increase in equityB. decrease in assets and an increase in liabilitiesC. increase in assets and an increase in equityD. decrease in equity and an increase in assets

Answer 1

C. increase in assets and an increase in equity

Step-by-step explanation:

When analyzing problems like this, just use the accounting equation as a guide:

Assets = Liabilities + Equity

That means this equation should always "equate" or be equal on both sides.

The only choice that respects the accounting equation is letter C.

↑Assets = Liabilities + ↑Equity

See, both sides had increased and the balance is maintained