Question: Your company pays back $2 million on a loan it had received earlier from a bank. How does this transaction affect the accounting equation? a. Assets decrease by $2 million, liabilities are unchanged, and contributed capital decreases by $2 million. b. Assets are unchanged, and liabilities and shareholders' equity both increase by $2 million. c. Assets decrease by $2 million, liabilities decrease by $2 million, and shareholders' equity is unchanged. d. Assets are unchanged, liabilities increase by $2 million, and contributed capital decreases by $2 million.
Question: Your company pays back $2 million on a loan it had received earlier from a bank. How does this transaction affect the accounting equation? a. Assets decrease by $2 million, liabilities are unchanged, and contributed capital decreases by $2 million. b. Assets are unchanged, and liabilities and shareholders' equity both increase by $2 million. c. Assets decrease by $2 million, liabilities decrease by $2 million, and shareholders' equity is unchanged. d. Assets are unchanged, liabilities increase by $2 million, and contributed capital decreases by $2 million.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Question:
Your company pays back $2 million on a loan it had received earlier
from a bank. How does this transaction affect the accounting equation?
a. Assets decrease by $2 million, liabilities are unchanged, and
contributed capital decreases by $2 million.
b. Assets are unchanged, and liabilities and shareholders' equity both
increase by $2 million.
c. Assets decrease by $2 million, liabilities decrease by $2 million, and
shareholders' equity is unchanged.
d. Assets are unchanged, liabilities increase by $2 million, and
contributed capital decreases by $2 million.
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