A transaction has been recorded in the T-accounts of Simpson Company as follows:

Which of the following could be an explanation for this transaction?
A)The company borrowed $850.
B)The company loaned $850 to another company.
C)The company repaid a $850 debt.
D)Simpson acquired $850 cash from the issue of common stock.

Question

A transaction has been recorded in the T-accounts of Simpson Company as follows:

Which of the following could be an explanation for this transaction?
A)The company borrowed $850. 
B)The company loaned $850 to another company. 
C)The company repaid a $850 debt. 
D)Simpson acquired $850 cash from the issue of common stock.

Quizplus · Accepted Answer

The debit to Cash and credit to Notes Payable indicates that cash,an asset account,increased and notes payable,a liability account,increased.This would be caused by acquiring cash by issuing a note.

A Transaction Has Been Recorded in the T-Accounts of Simpson