A business borrowed $20 000 from AXY Finance.The debit and credit entries for this transaction are:

Question

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The business borrowed money from AXY Finance, therefore its cash account will increase as it has received cash, and its liability account will increase as it owes a loan. The correct entries are: Debit cash $20 000; Credit loan from AXY finance $20 000. Option A and B are incorrect as they indicate the loan was paid for the accounts payable, which is not the case. Option D is incorrect as it indicates that the loan was paid before it was received.

A Business Borrowed $20 000 from AXY Finance