Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 45 - No. 38)
A company borrows money from a bank. How does this transaction affect the accounting equation?
Assets increase; liabilities increase.
Assets decrease; liabilities increase.
Assets increase; equity decreases.
Assets decrease; equity increases.
Explanation
Borrowing money increases the company's assets (cash) and liabilities (loan from the bank).
Comments (0)
