The owner of a business invested $5,000 in the business. What are the effects on the fundamental accounting equation?

Question

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When the owner invested $5,000 in the business, the assets increase by $5,000 (cash or other assets received), liabilities have no effect as no external borrowing was done, and owner's equity increases by $5,000 as the owner now has a larger stake in the business. Therefore, the effect on the fundamental accounting equation is: Assets = Liabilities + Owner's Equity, and the equation remains balanced with the increase in both assets and owner's equity by $5,000.

The Owner of a Business Invested $5,000 in the Business