When a company repays cash that is borrowed from the bank:
A)total assets remain the same.
B)liabilities are decreased.
C)retained earnings is decreased.
D)total liabilities remain the same.

Question

Quizplus · Accepted Answer

When a company repays cash that is borrowed from the bank, it decreases its liabilities as the obligation to repay the borrowed amount is reduced. The other options are incorrect as total assets will decrease if the cash was used to purchase assets, retained earnings will not necessarily decrease, and total liabilities will decrease as explained above.

When a Company Repays Cash That Is Borrowed from the Bank