A firm borrows $4000 cash from the bank.The transaction is recorded as:

Question

Quizplus · Accepted Answer

When a company borrows money from a bank, the transaction is recorded as follows:
Debit: Cash at bank (increase in assets)
Credit: Bank loan (increase in liabilities)

Option A is incorrect because Owner's capital is not relevant in this transaction.
Option B is incorrect because Accounts Receivable represents money owed to the company by customers, not money borrowed from a bank.
Option D has the opposite entries, which is incorrect.

A Firm Borrows $4000 Cash from the Bank