Correct Response: A. An asset is a resource that has economic value. Examples of assets are property, goods, machines, equipment, raw materials, human resources, and cash. When the owner invests cash into the company, the business's assets will increase. Based on the accounting equation (assets – liabilities = owner's equity), an increase in assets (while liabilities remain fixed) will also increase the owner's equity, not decrease it (B). The increase in assets may or may not increase profits (C). Unless the business decides to use the cash to pay creditors or to take other similar actions to reduce liabilities, the liabilities will not decrease (D).
