Recording the borrowing of money for which a note is signed involves:
A) Debiting Cash and crediting Notes Receivable
B) Debiting Cash and crediting Accounts Payable
C) Debiting Cash and crediting Service Fees Earned
D) Debiting Cash and crediting Notes Payable
E) None of the above

Question

Quizplus · Accepted Answer

When borrowing money for which a note is signed, the correct accounting entry is to debit Cash, because cash is received, and credit Notes Payable, as this creates a liability representing the obligation to repay the borrowed funds.

Recording the Borrowing of Money for Which a Note Is