Knowledge Check $01$

Palmer Corporation borrows $$40,000$ cash by signing a note with the bank. Which of the following statements correctly shows the effect of this transaction on the accounting equation?

Multiple Choice

Assets will increase by $$40,000,$ liabilities will decrease by $$40,000,$ and stockholders' equity will remain unchanged

Assets will increase by $$40,000,$ liabilities will remain unchanged, and stockholders' equity will decreatse by $$40,000$

Assets will increase by $$40,000,$ liabilities will remain unchanged, and stockholders' equity will increase by $$40,000$