Which of the following increases when the owner contributes cash?

• A. Cash decreases
• B. Accounts Payable increases
• C. Ross Morris, Capital increases
• D. Service Revenue increases

Answer: (C)

Contributing cash increases the owner’s stake in the business, i.e., owners’ equity. When the owner brings in cash, the accounting entry is a debit to Cash (asset increases) and a credit to Ross Morris, Capital (equity increases). So the correct result of an owner’s cash contribution is an increase in the capital account. The other options describe decreases in assets, an increase in a liability, or revenue, none of which capture the effect of an owner investing cash.