Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?

Question

Quizplus · Accepted Answer

Borrowing money from a bank results in an increase in liabilities because the company owes the bank $20,000. This will have no impact on net income but will increase total assets, as the cash received from the loan would be recorded as an asset on the balance sheet. There is no impact on stockholders' equity. Therefore, the correct answer is D, as liabilities increase by $20,000.

Which of the Following Properly Describes the Impact on the Financial