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To Meet Its Cash Flow Needs, a Company Obtained a 6

Question 32

Multiple Choice

To meet its cash flow needs, a company obtained a 6 month bank loan in the amount of $30,000. Annual interest on the loan (note payable) is 10%, payable when the note is due.
What would the effect of this transaction on the company's current month accounting equation?


A) No effect on Assets; $30,000 decrease in Liabilities; $30,000 increase in Stockholders' Equity
B) $30,000 increase in Assets; $30,000 increase in Liabilities; No effect on Stockholders' Equity
C) $30,000 increase in Assets; No effect on Liabilities; $30,000 increase in Stockholders' Equity
D) No effect on Assets; 30,000 increase in Liabilities; $30,000 decrease in Stockholders' Equity

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