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Effect of What is the effect of each of the following transactions on the three elements (assets, liabilities, and stockholders' equity) of the accounting equation? a. Invested cash in business in exchange for common stock. b. Paid for business expenses on Accounting Equation . Purchased supplies on account. Decreases assets and decreases liabilities. Decreases assets and decreases stockholders' equity. Increases assets and increases stockholders' equity. Increases assets and increases liabilities