Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 28 - No. 18)
What is the impact on the bank account when a business receives a bank loan?
The bank account is debited and liability is decreased.
The bank account is credited and liability is decreased.
The bank account is debited and liability is increased.
The bank account is credited and liability is increased.
Explanation
When a bank loan is received, the bank account is credited and a liability (the loan) is created, thus increasing the liability.
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