Identify which one of the following statements is always true.
A)An increase in an asset account must increase a liability or owners' equity account.
B)An increase in an asset account must decrease another asset account.
C)A decrease in an asset account must increase a liability or owners' equity account.
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

The correct answer is D because the statements A, B, and C are not always true. The effects on accounts depend on the specific transactions. For example, an increase in an asset account could be balanced by a decrease in another asset account, an increase in a liability or equity account, or a combination of these. The fundamental accounting equation (Assets = Liabilities + Equity) must remain in balance, but there are various ways this can be achieved, not limited to the scenarios described in A, B, or C.

Identify Which One of the Following Statements Is Always True