Dr. Brokealot deposits $25,000 into a bank account in the name of his corporate veterinary hospital, in exchange for shares of stock in the corporation. What effect would this have on the accounting equation?
  1. Increase owner equity on the right side of the equation, decrease assets on the left side of the equation
  2. Decrease assets on the left side of the equation and increase owner equity of the right side of the equation
  3. Increase owner equity on the left side of the equation, and increase assets on the left side of the equation
  4. Increase asset on left side of the equation, and increase owner equity on the right side of the equation
Explanation
Answer: D-If Dr. Brokealot deposits $25,000 into a bank account on the name of his veterinary hospital, in exchange for shares of stock in the corporation, it would increase assets on left side of the equation, and increase owner equity on the right side of the equation.
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