In part,a transaction affects the accounting equation as follows: Which of the following must be true for this transaction to keep the accounting equation in balance?
A)If other assets remain the same,shareholders' equity must increase.
B)If other assets remain the same,shareholders' equity must remain the same.
C)If shareholders' equity remains the same,another asset must decrease.
D)If shareholders' equity remains the same,all other assets must remain the same.

Question

Quizplus · Accepted Answer

According to the question, the transaction affects the accounting equation, which is Assets = Liabilities + Shareholders' Equity. For the equation to remain balanced, the total assets must be equal to the sum of liabilities and shareholders' equity. Therefore, if other assets remain the same, shareholders' equity must also remain the same to keep the equation in balance. Option A and C are incorrect as they suggest an increase or decrease in one account while the other remains unchanged, which would cause the equation to become unbalanced. Option D is also incorrect as it suggests that all assets must remain the same, which is not necessarily true.

In Part,a Transaction Affects the Accounting Equation as Follows: Which