A promissory note received for granting a time extension to a charge customer would have which effect on the categories?
A)Total assets would be increased.
B)Total liabilities would be increased.
C)Owner's equity would be decreased.
D)None of these answers are correct.

Question

Quizplus · Accepted Answer

Receiving a promissory note in exchange for granting a time extension to a charge customer does not increase total assets, as it merely replaces one asset (the account receivable) with another (the note receivable). It does not increase liabilities or decrease owner's equity, as the transaction does not involve taking on new obligations or reducing the owner's claim on the business assets.

A Promissory Note Received for Granting a Time Extension to a Charge