Jane Is an Accountant Operating as a Sole Proprietor

question 48

Multiple Choice

Jane is an accountant operating as a sole proprietor. On 1 February she does some work for a client on credit who she invoices for $120. On 10th of February the client pays his account and Jane banks the $120. Which of the following represents the effect of the receipt of cash transaction on the accounting equation for Jane's practice?

• A) Increase in cash at bank $120; increase in equity $120.
• B) Increase in cash at bank $120; decrease in asset accounts receivable $120.
• C) Increase in cash at bank $120; increase in asset accounts receivable $120.
• D) Increase in cash at bank $120; decrease in equity $120.

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Definitions:

SEC Oversight

Regulatory oversight exercised by the Securities and Exchange Commission, aiming to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

Short-Swing Profits

Profits made from the sale of company stock within any six-month period by a statutory insider.

Statutory Insider

An individual or entity that possesses confidential information about a company due to their position or relationship to it, as defined by law.

Company Stock

Equity securities issued by a corporation, representing ownership interests in the company.