what increases an asset and increases liability?

Answer 1

You cannot just decrease an asset and increase a liability without affecting equity since Assets = Liabilities + Equity. And since you want to find a situation where liabilities increase and assets decrease, you will need to decrease equity by the absolute value of both changes (ie -6 + 5 = 11). So, if Assets decrease by 5 and Liabilities increase by 6, then equity needs to decrease by 11 to keep the equation in equilibrium. Essentially this means that the journal entry will require some type of expense that is only partially paid.

For example, if you buy a $10 widget and incur and expense immediately but only pay for half of it immediately then your journal entry will be:

Dr. Widget expense 10

Cr. Accounts Payable 5

Cr. Cash 5

Assets decrease, and Liabilities increase. The trouble you were having was not recognizing the need for the equalizing equity account.