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A company borrowed from the bank by signing a longterm note. How does this transaction affect the accounting​ equation?
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A company borrowed from the bank by signing a longterm note. How does this transaction affect the accounting​ equation?

User Rpyzh
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1 Answer

2 votes

Answer:

Balanced

Step-by-step explanation:

Accounting equation: Assets = Liabilities + Equity

If a company borrows a loan note from the bank this will alternatively increase the assets because the cash received from the bank and liabilities portion will also increase at the opposite side with the same amount the asset is increased therefore the accounting equation will be balanced.

User Henryyao
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