If a company receives $12,400 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Question

Answer

Assets increase $12,400 and liabilities decrease $12,400.

Answer

Assets decrease $12,400 and equity decreases $12,400.

Answer

Assets increase $12,400 and liabilities increase $12,400.

Answer

Liabilities increase $12,400 and equity decreases $12,400.

Answer

Assets increase $12,400 and equity increases $12,400.

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