Jane Is an Accountant Operating as a Sole Proprietor

Multiple Choice

Jane is an accountant operating as a sole proprietor. In January she purchases for $540 some new furniture for her office. The purchase is made on credit. Which of the following represents the effect of this transaction on the accounting equation?

A) Increase in the asset furniture $540; increase in the liability accounts payable $540.
B) Increase in the asset furniture $540; decrease in the asset accounts receivable $540.
C) Increase in the asset furniture $540; increase in equity $540.
D) Increase in the asset furniture $540; increase in the asset accounts receivable $540.