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Summary QuestionWhen a corporation borrows funds by signing a note payable which includes an in $7.99
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Summary QuestionWhen a corporation borrows funds by signing a note payable which includes an in
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When a corporation borrows fundsQuestionWhen a corporation borrows funds by signing a note payable which includes an interest provision, which of the following accounts are affected on the date of the borrowing? I. cash II. notes payable III. interest payableAnswer & ExplanationWhen a corpora...

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  • October 13, 2024
  • 2
  • 2024/2025
  • Summary

Subjects

  • when a corporation borrows fundsïquestionwhen a
  • which of the following accounts are affected on t
  • the accounts affected on the date of borrowing ar

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Question


When a corporation borrows funds by signing a note payable which includes an

interest provision, which of the following accounts are affected on the date of

the borrowing? I. cash II. notes payable III. interest payable




Answer & Explanation


When a corporation borrows funds by signing a note payable that includes an

interest provision, the accounts affected on the date of borrowing are:


I. Cash: This account is affected because the corporation receives cash from the

lender. The cash account will increase as it reflects the inflow of funds.


II. Notes Payable: This account is also affected because it represents the

liability that the corporation has incurred by borrowing money. The notes

payable account will increase to reflect this new obligation.


III. Interest Payable: This account is not typically affected on the date of

borrowing itself. Interest payable usually comes into play when interest accrues

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