Borrowing Money from the Bank by Signing a Note Payable

question 116

Multiple Choice

Borrowing money from the bank by signing a note payable would:

• A) increase shareholders' equity
• B) increase net income
• C) decrease liabilities
• D) have no effect on shareholders' equity

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Definitions:

Negative Externality

A cost that is suffered by a third party due to an economic transaction that they were not involved in.

Well-Being

The state of being comfortable, healthy, or happy, reflecting the overall quality of a person's life.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required.

Market Equilibrium

A situation in which the quantity of a product demanded by consumers equals the quantity supplied by producers, leading to a stable price.