PRC-1 · Chapter 1 · Question 7 of 100
'Crescent Traders' repaid a bank loan of Rs. 200,000 via an online bank transfer. What is the overall impact of this transaction on the accounting equation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Decrease in assets and decrease in liabilities
Explanation
Repaying a loan using bank funds decreases the business's cash asset and simultaneously decreases its loan liability. The fundamental accounting equation remains in balance.
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