Camden Products buys a $600,000 machine by taking out a bank loan. The company's assets will ______ by $600,000 while its liabilities will ______ by $600,000.
A) rise; fall
B) fall; rise
C) rise; rise
D) fall; fall

Question

Quizplus · Accepted Answer

When Camden Products buys a $600,000 machine by taking out a bank loan, it means the company now has a new asset worth $600,000. Therefore, its assets will rise by $600,000. However, since the company also took on a $600,000 bank loan to purchase the machine, its liabilities will also rise by $600,000. Hence, the correct choice is C: rise; rise.

Camden Products Buys a $600,000 Machine by Taking Out a Bank