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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

When an asset increases, a liability must also increase.

To determine

State whether the given statement is true or false.

Explanation

Transaction analysis:

Transaction analysis is an economic event that causes impact on the value of the assets, liabilities or stockholder’s equity (increase or decrease) in an accounting equation.

  • “An increase in an asset is offset by an increase in owners’ equity”

For example, if person M has invested $50,000 in business then both cash account (asset) and owners’ equity (capital) increase by $50,000.

  • “An increase in an asset is offset by a decrease in another asset”

For example, if Person M purchased equipment for $3,000 then, the equipment account (asset) will increase by $3,000 and Cash account (asset) will decrease by $3,000...

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