Michael Anderson is starting a computer programming business and has deposited an initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected. Unabe to copy options

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16 August, 07:41

Michael Anderson is starting a computer programming business and has deposited an initial investment of $15,000 into the business cash account. Identify how the accounting equation will be affected. Unabe to copy options

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Addison Decker · Answer 1

Assets would be increased by $15,000 while owner's equity will also increase by $15,000.

Explanation:

The accounting equation shows the relationship between the elements of a balance sheet which are assets, liabilities and owner's equity.

it is given as

Assets = Liabilities + Owners equity

When a business owner invests an amount into a business, it means money is available for the business to operate hence cash is recognized as an asset. However, the owners equity also goes up by the amount invested.