Question

Assume that ABC Coffee has the following totals on its balance sheet: Assets = $100,000 Liabilities...

Assume that ABC Coffee has the following totals on its balance sheet:
Assets = $100,000
Liabilities = $40,000
ABC Coffee now borrows $50,000 from the bank.

Discussion Questions:
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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