Jane Is an Accountant Operating as a Sole Proprietor

question 7

Multiple Choice

Jane is an accountant operating as a sole proprietor. On 1 February she does some work for a client who pays her $320 in cash. Which of the following represents the effect of this transaction on the accounting equation?

• A) Increase in cash at bank $320; decrease in liability accounts payable $320.
• B) Increase in cash at bank $320; increase in equity $320.
• C) Increase in cash at bank $320; increase in asset accounts receivable $320.
• D) Increase in cash at bank $320; increase in liability accounts payable $320.

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Definitions:

Wage Rate

The amount of payment that a worker receives per unit of time (hourly, daily, etc.) or per unit of output.

Substitute Resources

Alternative products or services that can replace each other in use, offering consumers choices and influencing supply and demand dynamics in markets.

Employment of Land

The use of land resources for productive or economic activities, including farming, building, or conservation efforts.

Substitution Effect

The economic principle that as the price of one good increases, consumers will replace it with a cheaper alternative, assuming the utility derived remains unchanged.