Question
Question 10
A company borrowed $500,000 cash from a bank and used it to purchase $500,000 of new manufacturing equipment.
Which of the following items would be increased by the bank loan and equipment purchase transactions? (check all that apply)
Notes Payable
Total Assets
Cash from Financing
Cash from Investing
Inventory
1 point
11.
Question 11
At the end
A company borrowed $500,000 cash from a bank and used it to purchase $500,000 of new manufacturing equipment.
Which of the following items would be increased by the bank loan and equipment purchase transactions? (check all that apply)
Notes Payable
Total Assets
Cash from Financing
Cash from Investing
Inventory
1 point
11.
Question 11
At the end
Answers
GPT-4o mini
In the scenario provided where a company borrows $500,000 cash from a bank and uses it to purchase $500,000 of new manufacturing equipment, the following items would be increased:
1. **Notes Payable** - This will increase because the company now has a liability to repay the bank loan.
2. **Total Assets** - This will increase by $500,000 because the cash (an asset) goes up by $500,000 when the loan is received, and the equipment (another asset) increases by $500,000, leading to a total increase of $500,000 in assets.
The following items would not be increased:
- **Cash from Financing** - While cash is received from the bank loan, this term typically refers to cash inflows from financing activities, so it may not be applicable as a direct increase here.
- **Cash from Investing** - This will not be increased since the purchase of equipment involves outflow of cash, not an increase.
- **Inventory** - There is no indication of any activity involving inventory, so this would not be increased.
So, the correct items that would be increased are **Notes Payable** and **Total Assets**.
1. **Notes Payable** - This will increase because the company now has a liability to repay the bank loan.
2. **Total Assets** - This will increase by $500,000 because the cash (an asset) goes up by $500,000 when the loan is received, and the equipment (another asset) increases by $500,000, leading to a total increase of $500,000 in assets.
The following items would not be increased:
- **Cash from Financing** - While cash is received from the bank loan, this term typically refers to cash inflows from financing activities, so it may not be applicable as a direct increase here.
- **Cash from Investing** - This will not be increased since the purchase of equipment involves outflow of cash, not an increase.
- **Inventory** - There is no indication of any activity involving inventory, so this would not be increased.
So, the correct items that would be increased are **Notes Payable** and **Total Assets**.