Liz,after qualifying at university and having several years experience decides to set up her own dental practice..On 1 March she deposits $25,000 into a bank account she has opened for the practice.The effect of this transaction on the accounting equation is:

Question

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When Liz deposits $25,000 into the bank account, the cash account (asset) increases by $25,000. At the same time, there is an increase in equity of the same amount because Liz has contributed her personal funds to the business. Therefore, this transaction increases assets and equity by the same amount, and choice A is the correct answer.

Liz,after Qualifying at University and Having Several Years Experience Decides