ACCOUNTING 103

Which of the following is correct if the sole proprietor of an entity borrows P30,000 in
the name of the entity and deposits it into the entity’s bank account?

The assets of the entity increase by 30,000

The liabilities of the entity decrease by 30,000
The capital of the entity increases by 30,000
The drawings of the entity increase by 30,000

This refers to the process of entering transactions into the books of original entry

Identifying
Classifying
Recording
Reporting