Question
A company received $75,000 cash from a bank loan that must be repaid in three years.
Which of the following items would be increased by this bank loan transaction? (check all that apply)
Interest Payable
Notes Payable
Revenue
Current Assets
Cash from Investing
1 point
7.
Question 7
A c
Which of the following items would be increased by this bank loan transaction? (check all that apply)
Interest Payable
Notes Payable
Revenue
Current Assets
Cash from Investing
1 point
7.
Question 7
A c
Answers
GPT-4o mini
In the scenario where a company receives $75,000 cash from a bank loan, the following items would be increased:
1. **Notes Payable** - This represents the obligation to repay the loan, and it will increase because the company now has a liability for this amount.
2. **Current Assets** - The company receives cash, which is an asset, so current assets would increase by the same amount.
6. **Cash from Investing** - This would not be increased by the bank loan transaction because the cash received is from financing, not investing activities.
So, the correct answers are:
- **Notes Payable**
- **Current Assets**
**Interest Payable** would not be increased until interest on the loan is accrued. **Revenue** would not be increased because a loan is not revenue; it is a liability. Therefore, it should not be checked.
1. **Notes Payable** - This represents the obligation to repay the loan, and it will increase because the company now has a liability for this amount.
2. **Current Assets** - The company receives cash, which is an asset, so current assets would increase by the same amount.
6. **Cash from Investing** - This would not be increased by the bank loan transaction because the cash received is from financing, not investing activities.
So, the correct answers are:
- **Notes Payable**
- **Current Assets**
**Interest Payable** would not be increased until interest on the loan is accrued. **Revenue** would not be increased because a loan is not revenue; it is a liability. Therefore, it should not be checked.