The capital of a sole trader changes as a result of
Answer Details
The capital of a sole trader is the amount of money invested by the owner into the business. Any changes to this capital can occur due to various transactions. For example, when equipment is purchased by cheque, it does not affect the capital directly, as it is considered a non-cash transaction. However, when the owner draws money out of the business by cheque, it reduces the capital because it is treated as a withdrawal of funds by the owner. Similarly, when the business makes a purchase on credit, it does not affect the capital, but it does increase the liabilities of the business. Therefore, the correct answer is "drawing by cheque" as it reduces the capital of the sole trader.