Accounting · Accounting Equation
If a firm makes a net profit for the year, how is this profit ultimately reflected in the Balance Sheet Equation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It decreases Assets and increases Liabilities.
- 2It increases Liabilities and decreases Owner's Equity.
- 3It increases Owner's Equity and increases Assets.✓
- 4It increases Liabilities and increases Assets.
Correct answer
It increases Owner's Equity and increases Assets.
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