If a Bank Decides That It Must Write Off All

question 59

Multiple Choice

If a bank decides that it must write off all or part of the value of a loan, what is the corresponding reduction in a liability entry that the bank makes?

• A)Deposits are reduced by the amount of the loan write off.
• B)Borrowings are reduced by the amount of the loan write off.
• C)Net worth is reduced by the amount of the loan write off.
• D)Cash items in the process of collection are reduced by the amount of the loan write off.

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Definitions:

Life

The condition that distinguishes organisms from inorganic objects and dead entities, characterized by growth, reproduction, and the need for food and energy.

Cell

A small room in which a prisoner is locked up or in which a monk or nun sleeps, highlighting a different use of the word in a separate context.

Photosynthesis

The process by which green plants and some other organisms use sunlight to synthesize foods from carbon dioxide and water.

Glucose

A simple sugar that is an important energy source in living organisms and is a component of many carbohydrates.