If a transaction causes an equity account to increase, which of these related effects may also occur?

Question

Quizplus · Accepted Answer

If a transaction causes an equity account to increase, it must mean that an asset account has also increased, which is why (B) is the correct answer choice. An increase in a liability account would mean that there is now an obligation to pay back more, which would decrease equity. A decrease in an asset account would also decrease equity. An increase in another equity account would not have a direct relation to the initial transaction.

If a Transaction Causes an Equity Account to Increase, Which