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If an individual asset is increased, there will be a corresponding
- a)Increase of another asset or increase of capital.
- b)Decrease of another asset or increase of liability.
- c)Decrease of specific liability or decrease of capital.
- d)Increase of drawings and liability.
Correct answer is option 'B'. Can you explain this answer?
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If an individual asset is increased, there will be a correspondinga)In...
Explanation:
When an individual asset is increased, there are two possible scenarios that can happen:
1. Increase of another asset: This can happen if the increase in the asset is due to the transfer of value from another asset. For example, if cash is used to purchase inventory, the cash asset will decrease while the inventory asset will increase. However, this scenario is not always applicable.
2. Increase of liability: This is the most common scenario that occurs when an individual asset is increased. An increase in an asset can lead to an increase in liability. For example, if a company purchases a new piece of equipment, it will increase the asset value, but it will also increase the liability as the company needs to pay for the equipment. This is because the company has either borrowed money to make the purchase or has made a promise to pay for the equipment at a later date.
Therefore, option B is the correct answer as an increase in an individual asset will lead to a corresponding increase in liability.
When an individual asset is increased, there are two possible scenarios that can happen:
1. Increase of another asset: This can happen if the increase in the asset is due to the transfer of value from another asset. For example, if cash is used to purchase inventory, the cash asset will decrease while the inventory asset will increase. However, this scenario is not always applicable.
2. Increase of liability: This is the most common scenario that occurs when an individual asset is increased. An increase in an asset can lead to an increase in liability. For example, if a company purchases a new piece of equipment, it will increase the asset value, but it will also increase the liability as the company needs to pay for the equipment. This is because the company has either borrowed money to make the purchase or has made a promise to pay for the equipment at a later date.
Therefore, option B is the correct answer as an increase in an individual asset will lead to a corresponding increase in liability.
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If an individual asset is increased, there will be a correspondinga)In...
If an asset is bought.Either it will lowers down cash or any other asset or it will increase the liability. What is big thing here?
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If an individual asset is increased, there will be a correspondinga)Increase of another asset or increase of capital.b)Decrease of another asset or increase of liability.c)Decrease of specific liability or decrease of capital.d)Increase of drawings and liability.Correct answer is option 'B'. Can you explain this answer?
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