What the effect on the accounting equation would be

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Problem 1: If a company receives $10,600 from its sole stockholder to establish a corporation, the effect on the accounting equation would be:

Multiple Choice

Option 1: Assets increase $10,600 and equity increases $10,600.
Option 2: Liabilities increase $10,600 and equity decreases $10,600.
Option 3: Assets increase $10,600 and liabilities increase $10,600.
Option 4: Assets increase $10,600 and liabilities decrease $10,600.
Option 5: Assets decrease $10,600 and equity decreases $10,600.

Reference no: EM133010650

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