Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Describe how the borrowed cash at a local bank affects the three elements of the accounting equation
Describe how the borrowed cash at a local bank affects the three elements of the accounting equation.
A borrowed cash at a local bank will increase the assets and liabilities while leave the equity unaffected.
The proforma journal entry for this transaction is as follows:
| Account | Debit | Credit |
|---|---|---|
| Cash | XXX | |
| Loan payable | XXX |
Cash is an asset account and a debit to it increases it. On the other hand, loan payable is a liability which increases when credited.
