Question
Assume that XYZ tires has the following totals on its balance sheet: Assets: $100,000 Liabilities: $40,000 XYZ Tires now borrows $50,000 from the bank. 1.
Assume that XYZ tires has the following totals on its balance sheet:
Assets: $100,000
Liabilities: $40,000
XYZ Tires now borrows $50,000 from the bank.
1. How will the totals for assets and liabilities be affected by the loan? Explain.
2. Is the borrowing a good idea for the business? Why or why not?
3. How might the business use the $50,000?
4. What other information would be useful to have before deciding to take out the loan?
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Financial Accounting An International Introduction
Authors: David Alexander, Prof Christopher Nobes, Chris W. Nobes
4th Edition
027372164X, 978-0273721642
