Country Homes Corporation just recorded a transaction in its books. If this transaction increased the total liabilities by $10,000, then ________.

Question

Quizplus · Accepted Answer

In accounting, the fundamental accounting equation states that Assets = Liabilities + Equity. If Country Homes Corporation's total liabilities increased by $10,000, the equation must balance by increasing either assets or decreasing equity by the same amount of $10,000. Therefore, the best answer is (A).

Country Homes Corporation Just Recorded a Transaction in Its Books