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sole trader sells goods for cash for $500 which had cost of $300. Which elements of the accounting equation will change due to this transaction?Question 1Answera.Capital and liabilitiesb.Assets onlyc.Assets and liabilitiesd.Assets and capital

Question

sole trader sells goods for cash for 500whichhadcostof500 which had cost of 300. Which elements of the accounting equation will change due to this transaction?Question 1Answera.Capital and liabilitiesb.Assets onlyc.Assets and liabilitiesd.Assets and capital

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Solution

The elements of the accounting equation that will change due to this transaction are Assets and Capital.

Here's why:

  1. The sole trader sells goods for cash. This increases the cash asset by $500.

  2. The cost of the goods sold was 300.Thisdecreasestheinventoryassetby300. This decreases the inventory asset by 300.

  3. The difference between the selling price and the cost price (500−500 - 300 = $200) is the profit from the transaction. This increases the owner's equity or capital.

So, the correct answer is d. Assets and Capital.

This problem has been solved

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