Fresh capital introduction will increase____________?
Correct answer: A. Assets and equity
- A. Assets and equity
- B. Assets and liabilities
- C. Liabilities and equity and bank balance
- D. Capital and liabilities
Explanation
Fresh capital is an owner contribution, which increases the business's assets and owner's equity by equal amounts. It does not create a liability because the amount is not owed to the owner as a creditor.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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