Henry Is an Accountant Operating as a Sole Proprietor

question 47

Multiple Choice

Henry is an accountant operating as a sole proprietor. On 10 April he performs work for a client to the value of $400 on credit. The effect of this transaction on the accounting equation is:

• A) Cash at bank increases by $400; Accounts payable decreases by$400.
• B) Equity increases by $400; Accounts payable increases by $400.
• C) Accounts receivable increases by $400; Equity increases by $400.
• D) Cash at bank increases by$400; Equity decreases by $400.

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