Baby Beach Company experienced an event that had the following effects on its financial statements.
-Which of the following events could have caused these effects?
A) Paid cash to settle accrued interest payable
B) Paid cash to settle the principal balance of note payable
C) Issued a note payable for cash
D) Paid cash to acquire a long-term asset

Question

Baby Beach Company experienced an event that had the following effects on its financial statements.  
-Which of the following events could have caused these effects?
A) Paid cash to settle accrued interest payable 
B) Paid cash to settle the principal balance of note payable 
C) Issued a note payable for cash 
D) Paid cash to acquire a long-term asset

Quizplus · Accepted Answer

The decrease in cash and increase in notes payable indicate that Baby Beach Company paid cash to settle the principal balance of a note payable.

Baby Beach Company Experienced an Event That Had the Following