Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient on credit whom she invoices for $120.On 10^th of February the patient pays his account and Jane banks the $120.The effect of the receipt of cash transaction on the accounting equation for Jane's practice is:

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When Jane receives the payment from the patient, her cash at bank account increases by $120. At the same time, the patient's account is settled and her account receivable decreases by $120. Therefore, the effect on the accounting equation is an increase in cash at bank and a decrease in accounts receivable, which is represented by option A.

Jane Is an Osteopath Operating as a Sole Proprietor