Billington Corp borrows $80,000 cash from Second National Bank.How does this transaction affect the accounting equation for Billington?

A) Assets would decrease $80,000 and liabilities would decrease $80,000.
B) Assets would decrease $80,000 and equity would increase $80,000.
C) Assets would increase $80,000 and equity would decrease $80,000.
D) Assets would increase $80,000 and liabilities would increase $80,000.
E) Liabilities would decrease $80,000 and equity would increase $80,000.

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Oshante Mckeithan · Accepted Answer

Final Answer : D, Explanation :  Borrowing $80,000 from Second National Bank would increase the assets of Billington by $80,000 (cash) and the liabilities by $80,000 (loan payable). Thus, the accounting equation would be:Assets (+) $80,000 = Liabilities (+) $80,000 + Equity (0)

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