Accounting for IGCSE & O level - Accounting Procedures (Section 27 - No. 14)
What happens when a business takes out a 10-year commercial bank loan?
Bank loan account (debit) and owner's equity (credit).
Bank account (debit) and bank loan account (credit).
Bank account (credit) and bank loan account (debit).
Bank loan account (debit) and bank account (credit).
Explanation
The bank account increases (debit) due to the cash inflow, and the bank loan account increases (credit) to reflect the liability.
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