Question

Jessica has brought in $10,000 of her personal funds to expand her business. How will it affect the accounting equation?

A. Assets ↑ (10,000) = Liabilities + Owners’ Equity ↑ (10,000)
B. Assets = Liabilities ↑ (10,000) + Owners’ Equity ↓ (10,000)
C. Assets ↑ (10,000) = Liabilities + Owners’ Equity ↓ (10,000)
D. Assets = Liabilities ↑ (10,000) + Owners’ Equity ↑ (10,000)
E. Assets↑ (10,000) = Liabilities ↑ (10,000) + Owners’ Equity

Answer 1

A. Assets ↑ (10,000) = Liabilities + Owners’ Equity ↑ (10,000)

Step-by-step explanation:

The funds brought in will increase the cash held by the business. Cash is an asset, meaning assets will increase by $10,000.

The $10,000 will be an additional capital contribution from Jessica. The business's capital will go up by $10,000. It means equity will increase by $10,000.