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Jones borrows $50,000 from Bank of America. How does this transaction affect the accounting equation

Sagot :

Manethoidn

Explanation:

Basis accounting principle says that asset account are debited when they are increasing and liability are credited when they are increasing and vice versa.

Therefore, in this transaction

Assets(cash in hand) increase by $50000, liabilities(loan) increase by $50000 and there is no effect on equity.

The accounting equation basically represents the balance sheet that shows the relationship between the assets of the firm, liabilities of the firm, and the equity of the firm. It is the basic pave for the book-keeping system and also equals the debits with the credits.  

The basis accounting principle says that asset account are debited when they are increasing and liability is credited when they are increasing and vice versa.

Therefore, in this transaction

Assets(cash in hand) increase by $50000, liabilities(loan) increase by $50000, and there is no effect on equity.

To know more about the effect of the accounting equation, refer to the link below:

https://brainly.com/question/13575039

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