When a Firm Borrows Money, One Effect on the Accounting

question 91

Multiple Choice

When a firm borrows money, one effect on the accounting equation is a(n)

• A)decrease in contributed capital.
• B)increase in assets.
• C)decrease in liabilities.
• D)decrease in assets.

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Definitions:

Foreign Currency Transactions

Financial operations involving the exchange of one country's currency for another, affecting businesses that trade or invest across borders.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is globally recognized for financial reporting.

One-transaction Approach

A fiscal approach viewing an intercompany transaction as a singular event affecting consolidated financial statements, without recognizing it in individual accounts.

Two-transaction Approach

An accounting method where a transaction is considered to involve two separate events that are recorded independently.