Marsh, Without Fraudulent Intent, Wrote a Check for $500 on Her

question 4

Multiple Choice

Marsh, without fraudulent intent, wrote a check for $500 on her checking account at Mechanics Mutual Bank, where only $350 was on deposit. Marsh has no agreement with the bank regarding overdrafts. In this case the bank

• A) must pay $350.
• B) must pay $500.
• C) may honor the check and charge Marsh's account for no more than $350.
• D) may honor the check and charge Marsh's account for $500.

Grasp the process and purpose of transferring transaction information to ledger accounts.

Understand the structure and significance of a chart of accounts.

Recognize the treatment of deferred revenues in financial statements.

Understand the basic principles and processes of recording financial transactions in accounting.

---

Definitions:

Closed System

A physical or economic system that does not interact with or exchange matter with its surroundings.

Say's Law

An economic theory that suggests that supply creates its own demand, meaning that production inherently generates a demand for the goods produced.

Open Economy

An economy linked to the rest of the world through international trade.

Equilibrium GDP

The level of GDP at which total demand for goods and services equals total supply in an economy, indicating a state of economic balance.