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    brit_chantal's Avatar
    brit_chantal Posts: 1, Reputation: 1
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    #1

    Jun 23, 2009, 09:14 AM
    How borrowing cash by signing long-term note payable affect financial statements?
    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?
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #2

    Jun 30, 2009, 11:37 AM
    Quote Originally Posted by brit_chantal View Post
    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
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Jul 3, 2009, 03:00 AM

    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

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