PRC-1 · Chapter 1 · Question 51 of 100
Mr. Asad, the sole proprietor of 'Apex Consulting', decides to transfer his personal car into the business for official use. What is the immediate impact of this transaction on the accounting equation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Increase in an asset, increase in owner's equity
Explanation
When an owner contributes personal assets, such as a car, to the business, it increases the business's total assets and simultaneously increases the owner's capital (equity).
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