Question

When a company lends cash to a customer who signs a promissory note: total assets decrease when the lending transaction occurs, but increase when the amount borrowed by the customer is repaid. total assets increase when the lending transaction occurs and revenues increase when the amount borrowed by the customer is repaid. total assets increase and liabilities increase when the lending transaction occurs. total assets and net income do not change when the lending transaction occurs?

Answer 1

The correct option is this: TOTAL ASSET DECREASES WHEN THE LENDING TRANSACTION OCCUR BUT INCREASE WHEN THE AMOUNT BORROWED BY THE CUSTOMER IS REPAID.
When a loan is given out, the asset account will be debited while the cash account is credited. This means that, at the point of giving the loan, the value of one's asset has decrease. Asset value will increase when the loan is paid.