Table 29-4. The First Bank of Fairfield

question 333

Multiple Choice

Table 29-4.
The First Bank of Fairfield
-Refer to Table 29-4. If $800 is deposited into the First Bank of Fairfield, and the bank takes no other actions, its

• A)reserves will increase by $100.
• B)liabilities will increase by $800.
• C)assets will decrease by $800.
• D)loans will increase by $800.

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Definitions:

Accounts Receivable

Money owed to a business by its clients for goods or services delivered but not yet paid for.

Bad Debts

Amounts owed to a company that are not expected to be received, often due to the debtor being unable to pay. These are often written off as an expense.

Financing Activities

Transactions that result in changes in the size and composition of the equity and borrowings of an entity, as reported in the cash flow statement.

Repayment of Borrowings

The process of paying back borrowed funds to creditors, including the principal amount and any applicable interest.