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:

Personal Injury

Physical or emotional harm suffered by an individual, often leading to legal action for damages.

Breach

The violation or breaking of a law, duty, or other form of agreement.

Goods Not Yet Delivered

Refers to items that have been sold or ordered but have not been physically moved or handed over to the buyer or recipient.

Seller and Lessor

Terms referring to parties in transactions where goods are sold (seller) or property is leased (lessor) to another party.