An owner makes an investment of cash into the business. Such a transaction would include a:

Question

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When an owner makes an investment of cash into the business, it is considered a cash inflow. Therefore, it would be recorded by debiting the Cash account. Option B (debit to Accounts Receivable) is incorrect because Accounts Receivable is an asset account that represents amounts owed to the business by its customers. This account would not be impacted by an investment of cash by the owner. Option C (debit to Common shares) is incorrect because this account would only be impacted if the owner was issuing new shares of common stock to raise capital. Option D (credit to Cash) is incorrect because a credit to cash would mean that cash was leaving the business, which is not the case with an investment of cash by the owner.

An Owner Makes an Investment of Cash into the Business