Final answer:
Investing additional cash into a business by a sole proprietor increases both the assets and the owner's equity in the fundamental accounting equation without affecting the liabilities.
Step-by-step explanation:
When the sole proprietor of a business invests more cash into the business, it impacts the fundamental accounting equation, which is Assets = Liabilities + Owner's Equity. The cash investment increases the business's assets. Simultaneously, since the investment is made by the owner, the owner's equity in the business also increases by the same amount. There are no changes to the liabilities unless the cash was obtained through a loan. The fundamental accounting equation remains balanced, as the increase in assets is exactly offset by the increase in owner's equity.