Question

If assets are increased by 2,000 and liabilities are increased by 1,200. What will be the effect on business equity?

• A. 800
• B. 2,000
• C. 3,200
• D. 1,200.

Answer 1

The correct option is A 800

The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows:

Assets = Liabilities + Equity ( Capital)

Equity = Assets - Liabilities
= 2,000 - 1,200

= 800.