1.5k views
5 votes
Which of the following increases liabilities but not assets? a. Taking out a loan to buy a new car b. Taking out a loan to go on vacation c. Using a credit card to buy a computer d. Paying off a student loan Please select the best answer from the choices provided A B C D

User Ekholm
by
4.4k points

2 Answers

0 votes

The answer is B: Taking out a loan to go on vacation.

User Nflacco
by
3.5k points
2 votes

Answer:

Taking out a loan to go on vacation

Step-by-step explanation:

Liabilities are money owed to other people. They include debts, loans, or other obligations that a person or business is expected to pay. Taking up loans increases liabilities. A loan to expand a business either by increasing inventory or equipment add to both assets liabilities.

A vacation is not an asset. A loan to finance a vacation will only add to liabilities. Paying off a student loan reduces liabilities. Any debt to purchase a car or a computer increases assets and liabilities since the two are assets.

User David Neale
by
4.2k points