If Assets Increase And Liabilities Decrease What Happens To Equity
Here we are co ncerned wit h t he Accounting Question s t hat “if assets (A) i ncrease and liab ilities (L) decrease, the n w hat effect will b e o n Equity (E) or ow ner's equity or Capital ” And "If There is an increase / decrease in liabilities what will happen to assets"? Practically, it is impossible that assets increase and liabilities decrease at the same time as increase in assets is debited and decrease in liabilities is also debited. According to Dual Aspect Accounting Concept, "For every debit, there must be a credit with an equal amount". However, there are possibilities that total assets are increased and total liabilities are decreased and vice versa. Also, there are possibilities that A increases and L increases with an equal amount at the same time or A decreases and L also decreases with an equal amount. In order to answer t hese questio ns, we use Accounting Equation w hich shows that: ...