A Company Borrows $2 Million from Its Bank

Multiple Choice

A company borrows $2 million from its bank. It then uses this money to buy equipment. How does this transaction affect the accounting equation?

A) Assets and Liabilities both rise $2 million.
B) Assets and Stockholders' Equity both fall $2 million.
C) Assets, Liabilities, and Stockholders' Equity are unchanged.
D) Stockholders' Equity rises $2 million and Liabilities fall $2 million.