Final answer:
The impact of an owner investing personal cash into a business results in an increase in both assets and owner's equity, with no effect on liabilities.
Step-by-step explanation:
When an owner invests personal cash into their business, the financial impact can be summarized as follows:
- Assets - Increase: The cash balance of the business increases.
- Liabilities - No effect: There is no change in the company's debts or obligations.
- Owner's Equity - Increase: The amount of money the owner has invested into the company goes up.
This financial transaction is reflected in the accounting equation: Assets = Liabilities + Owner's Equity. By adding cash (an asset), the owner is also increasing their equity in the business without affecting liabilities. It's important to track such transactions to maintain accurate financial records and understand the company's fiscal health.