Owner's capital increases via personal asset contributions

Steps:

• Identify owner's capital as the owner's equity in the business, increased by investments or profits.
• Evaluate each option for direct impact on equity accounts.
• Check if the transaction adds assets without corresponding liabilities or expenses.
• Confirm the option that records an increase in capital via owner's contribution.

Why the correct option is correct:

• Transferring a personal vehicle to business use is an owner's capital contribution, increasing assets and capital per the accounting equation (Assets = Liabilities + Owner's Capital).

Why the others are wrong:

• A: Extends loan term but does not add new funds or equity; merely adjusts liability duration.
• B: Increases inventory (asset) and accounts payable (liability) equally, leaving capital unchanged.
• C: Exchanges cash (asset) for machinery (asset), with no net effect on capital.

Final answer: D