Please explain the answer step by step as I\'m trying to learn. Thank you Part C

Question

Please explain the answer step by step as I'm trying to learn. Thank you

Part C: Indicate how the following transactions affect the accounting equation Choose from the following affects: Input either A, B, C, D, E, F, G or H A. Assets increase, liabilities increase. B. Assets increase, shareholders' equity increases C. Assets increase, assets decrease D. Assets decrease, liabilities decrease. E. Assets decrease, shareholders' equity decreases. F. Liabilities decrease, shareholders' equity increases. G. Liabilities increase, shareholders' equity decreases. H. No impact, no affect. Q# | Transaction: Solution: Q1 An owner invests $25,000 in the business, cash. Q2 Paid for the use of a business cell phone, $80 plus HST Q3 Paid off your loan of $10,000 using cash.

Explanation / Answer

Asset = Liabilities + Capital

Answer1 : B, Asset increases, shareholders' equity increases

Cash increases in asset side and shareholder equity increase in capital side.

Asnwer2 : Asset decreases, shareholders' equity decreases

Cash decreases in asset side and shareholder equity decreases in capital side

Asnwer3 : Asset decreases, liabilities decreases

Cash decreases in asset side and loan decreases in liabilities side

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