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. Suppose Mr. Chen lends P500,000 cash to the entity. At the same, the entity uses part of the money to repay the amount owed to a creditor and holds the remaining amount of P400,000 in the bank account. Which of the following effects on the accounting equation is correct? Select one: a. Assets increase by P500,000 and liabilities increase by P500,000 b. Assets decrease by P100,000 and liabilities increase by P500,000 c. Assets increase by P400,000 and liabilities increase by P400,000 d. Assets increase by P400,000 and liabilities decrease by P500,000

. Suppose Mr. Chen lends P500,000 cash to the entity. At the same, the entity uses part of the money to repay the amount owed to a creditor and holds the remaining amount of P400,000 in the bank account. Which of the following effects on the accounting equation is correct? Select one: a. Assets increase by P500,000 and liabilities increase by P500,000 b. Assets decrease by P100,000 and liabilities increase by P500,000 c. Assets increase by P400,000 and liabilities increase by P400,000 d. Assets increase by P400,000 and liabilities decrease by P500,000

College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter6: Bank Accounts, Cash Funds, And Internal Controls
Section: Chapter Questions
Problem 8DQ
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5. Suppose Mr. Chen lends P500,000 cash to the entity. At the same, the entity uses part of the money to repay the amount owed to a creditor and holds the remaining amount of P400,000 in the bank account. Which of the following effects on the accounting equation is correct?
Select one:

a.
Assets increase by P500,000 and liabilities increase by P500,000

b.
Assets decrease by P100,000 and liabilities increase by P500,000

c.
Assets increase by P400,000 and liabilities increase by P400,000

d.
Assets increase by P400,000 and liabilities decrease by P500,000

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