Aashish Company had a transaction that caused a $120,000 decrease in both assets and liabilities. This transaction could have been a(n):
A) Purchase of office equipment for $162,000, paying $42,000 cash and issuing a note payable for the balance
B) Investment of $120,000 cash in the business by the stockholders
C) Purchase of office equipment for $120,000 cash
D) Repayment of a $120,000 bank loan

Question

Quizplus · Accepted Answer

The repayment of a $120,000 bank loan is the only transaction that decreases both assets and liabilities by $120,000.

Aashish Company Had a Transaction That Caused a $120,000 Decrease