Recording the borrowing of money for which a note is signed involves:
A) Increasing Cash and decreasing Notes Receivable
B) Increasing Cash and increasing Accounts Payable
C) Increasing Cash and increasing Service Fees Earned
D) Increasing Cash and increasing Notes Payable
E) None of the above

Question

Quizplus · Accepted Answer

When a company borrows money and signs a note for it, it increases its cash because it receives the borrowed funds. At the same time, it increases its notes payable because this account represents the company's obligation to repay the borrowed amount.

Recording the Borrowing of Money for Which a Note Is