Which one of the following statements is generally true regarding the relationship between the items mentioned?
A) An increase in assets will always cause an increase in owners' equity.
B) A decrease in assets will always cause a decrease in liabilities.
C) An increase in revenues normally increases owners' equity.
D) Expenses decrease revenues.

Question

Quizplus · Accepted Answer

An increase in revenues will normally increase owners' equity as revenues are the primary source of income for a business and increase the amount of money that owners have invested in the business. The other options are not always true as there are exceptions, such as when assets are financed by liabilities or when expenses are incurred for non-revenue-generating activities.

Which One of the Following Statements Is Generally True Regarding