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The company repays the bank that had lent money to the company. OWNER`S EQUITY?

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تم إضافة السؤال من قبل Imdad Hussain Rajput , Assistant Sales Manager , Forego
تاريخ النشر: 2015/08/01
Shahbaz Hayder
من قبل Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Option3 is the right answer.

Mehboob Ali Laghari
من قبل Mehboob Ali Laghari , Social Mobilization Team Incharge , TRDP-European Union

3................ Should be the right answer

Michael Lagunday
من قبل Michael Lagunday , Accounts Assistant , Invest Group Overseas LLC

My answer is3. No Effect.

 

When the company repays its debt to the bank, there is no effect with the owner’s equity. The entry in making the payment is debit to Loans and credit to Cash. However, most loans have interest in which could decrease owner’s equity.

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