After depositing personal money into her business account, what is the new total impact on Rosemary's Equity?

After depositing personal money into her business account, what is the new total impact on Rosemary's Equity?

• A. It remains the same
• B. It decreases
• C. It increases
• D. It doubles

Answer: (C)

When Rosemary deposits personal money into her business account, this transaction increases her equity in the business. Equity represents the owner's interest in the business, and it is impacted by the contributions made by the owner.

In this scenario, when Rosemary adds personal funds to her business account, she is effectively infusing capital into her business. This action is recorded as an increase in the equity section of her balance sheet because it reflects that the business has more resources that can be used for operational or investment purposes.

Thus, the increase in the cash balance from the deposit translates directly into an increase in equity, as it signifies that the owner has invested more of her personal wealth into the business, enhancing the overall value of her ownership stake.