Asked by Kaitlynn Whitworth on Jul 17, 2024
Verified
Which of the following entries records the investment of cash by Sam, owner of a sole proprietorship?
A) Debit John, Capital; credit Cash
B) Debit Cash; credit Revenue
C) Debit Sam, Withdrawals; credit Revenue
D) Debit Cash; credit Sam, Capital
Sole Proprietorship
A type of business organization that has one owner. The owner is personally liable for paying the business’s debts.
- Identify the distinctions between assets, liabilities, capital, revenue, expenses, and withdrawals.
Verified Answer
AM
Anjalique MelvinJul 17, 2024
Final Answer :
D
Explanation :
When an owner invests cash in a sole proprietorship, the cash account (an asset) increases, so it is debited. The owner's equity account increases as well, reflecting the owner's claim on the business assets, so the owner's capital account is credited. Option D correctly reflects this transaction.
Learning Objectives
- Identify the distinctions between assets, liabilities, capital, revenue, expenses, and withdrawals.