Final answer:
An increase in assets or a decrease in liabilities not related to daily operations is defined as a gain. This adjustment positively impacts the net worth on a balance sheet and reflects a one-time event rather than ongoing business activities.
Step-by-step explanation:
An increase in assets, a reduction in liabilities, or a combination of both that is not related to daily operations is defined as a gain. An asset is an item of value that a firm or an individual owns, for instance, cash or a home. Conversely, a liability is a debt or something you owe, like a mortgage. When assets increase or liabilities decrease outside of the regular business activities, this typically reflects a one-time event leading to a gain, which subsequently increases the overall net worth of the individual or business.
A bank's balance sheet is an accounting tool that lists assets and liabilities, and demonstrates these principles on a larger scale. For example, coins and currency in circulation are considered an asset for a bank. Bank capital, or a bank's net worth, increases when the institution experiences gains from events outside its regular banking activities, such as selling a piece of real estate it owns at a profit.An increase in assets, a reduction in liabilities, or a combination of both that is not related to daily operations is defined as a gain.