A photo studio has a $25,000 loan from a bank and decides to pay it off using some of its cash. The transaction would be recorded as follows:
A) increase cash (an asset) by $25,000; decrease bank loan (a liability) by $25,000.
B) increase cash (an asset) by $25,000; increase bank loan (a liability) by $25,000.
C) decrease bank loan (a liability) by $25,000; decrease cash (an asset) by $25,000.
D) decrease cash (an asset) by $25,000; increase bank loan (a liability) by $25,000.
Correct Answer:
Verified
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