Jane Is an Accountant Operating as a Sole Proprietor

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.