Asked by Michelle Tseng on Jul 18, 2024
Verified
Which of the following entries records the investment of cash by Taylor Thomas, owner of a proprietorship?
A) debit Taylor Thomas, Capital; credit Accounts Receivable
B) debit Cash; credit Taylor Thomas, Capital
C) debit Taylor Thomas, Drawing; credit Cash
D) debit Cash; credit Taylor Thomas, Drawing
Proprietorship
A business owned by one individual.
Drawing
Drawing refers to the withdrawal of cash or other assets from a company by the owner(s) for personal use, decreasing the owner's equity in the business.
- Assess the effects of transactions on the balance of accounts.
- Familiarize oneself with the procedure for documenting transactions within financial reports.
Verified Answer
ES
Edward SpencerJul 19, 2024
Final Answer :
B
Explanation :
When the owner of a proprietorship invests cash, it increases the owner's equity in the business. Therefore, we would debit Cash (asset) and credit the owner's equity account, which is typically named after the owner (in this case, Taylor Thomas, Capital). Option B correctly reflects this by debiting Cash and crediting Taylor Thomas, Capital.
Learning Objectives
- Assess the effects of transactions on the balance of accounts.
- Familiarize oneself with the procedure for documenting transactions within financial reports.