When borrowing cash by signing long-term note payable, how does this affect total assets, total liabilities, total equity, net income, operating, financing and investing activities?

Quote:

---

Originally Posted by brit_chantal

When borrowing cash by signing long-term note payable, how does this affect total assets, total liabilities, total equity, net income, operating, financing and investing activities?

---

The entry is
Debit Cash
Credit notes payable

The effect is that the total assets and total liabilities have increased.
Debt ratio will increase
Net income will decrease on accrual of interest
Operating activities - affected by the amount of interest accrued and paid
Investing activity - no effect
Financing activity - inflow of long term notes will be reported

Really need to stop doing people's homework for them. That isn't the idea behind this forum's existance:

Ask Me Help Desk - Announcements in Forum : Homework Help