Accounting Multiple Choice Question – 22 January 2024

Alex Trading borrows £10,000 from a bank.

Which elements of the accounting equation will change due to this transaction?

Select ONE answer:

1. Assets and liabilities
2. Assets and capital
3. Capital and liabilities
4. Assets only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct -Assets increase as cash on receipt of the loan funds, and liabilities will increase as the loan is a liability.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.