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1 December, 17:24

A company borrows cash from a local bank. The company records this transaction with a: Multiple Choice a. Debit to Accounts b. Receivable Debit to Cash c. Credit to Accounts Payable d. Credit to Retained Earnings

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  1. 1 December, 19:29
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    b. Debit to Cash

    Explanation:

    when cash is borrowed, the company recognizes an asset in form of cash however, this same transaction gives rise to a liability (a present obligation as a result of a past event) as the cash will be paid back later.

    Hence the company debits cash and credits a loan account with the amount borrowed.
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Home » Business » A company borrows cash from a local bank. The company records this transaction with a: Multiple Choice a. Debit to Accounts b. Receivable Debit to Cash c. Credit to Accounts Payable d. Credit to Retained Earnings
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