If a company has excess space in its building that it rents to another company for $700, what is the effect on the accounting equation during the first month?
A. Assets would decrease $700 and equity would increase $700.
B. Liabilities would decrease $700 and equity would increase $700.
C. Assets would increase $700 and equity would decrease $700.
D. Assets would decrease $700 and liabilities would decrease $700.
E. Assets would increase $700 and equity would increase $700.
Answer: E
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