A Company Borrows $2 Million from Its Bank

question 108

Multiple Choice

A company borrows $2 million from its bank.It then uses this money to buy equipment.How do these two transactions affect the company's accounting equation?

• A) Assets and liabilities both increase by $2 million.
• B) Assets increase by $2 million and liabilities decrease by $2 million.
• C) Assets increase by $4 million, liabilities increase by $2 million, and stockholders' equity increases by $2 million.
• D) Assets remain unchanged and liabilities increase by $2 million.

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