Katie's Vegetarian Restaurant, with total Assets of $121,000, borrows $27,000 from the bank. Which of the following is a true statement upon borrowing the money?
A) Total Assets are now $148,000.
B) Total Assets are now $94,000.
C) Total Assets are now $175,000.
D) Total Assets are now $121,000.

Question

Quizplus · Accepted Answer

When Katie's Vegetarian Restaurant borrows $27,000 from the bank, its total assets increase by that amount because the cash balance increases. Therefore, the new total assets are $121,000 (original assets) + $27,000 (borrowed amount) = $148,000.

Katie's Vegetarian Restaurant, with Total Assets of $121,000, Borrows $27,000