Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 17 - No. 40)
What is the effect on the accounting equation when a company borrows money from a bank?
Assets increase, Liabilities decrease
Assets increase, Liabilities increase
Assets decrease, Liabilities increase
Assets decrease, Liabilities decrease
Explanation
Borrowing money increases both the asset (cash) and the liability (notes payable).
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