When a Bank Has a Check Drawn and Cleared Against

question 44

Multiple Choice

When a bank has a check drawn and cleared against it,

• A) excess reserves in the banking system decline.
• B) the nation's total money supply falls.
• C) the bank's balance sheet does not change.
• D) the amount of required reserves the bank must have will fall.

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Definitions:

Allowance Method

An accounting technique that estimates and sets aside a portion of accounts receivable deemed not collectible.

Uncollectible Account

An uncollectible account is a receivable that a company is unable to collect, considered as bad debt or a write-off.

Net Amount

The remaining value after all deductions are made, such as for taxes or discounts.

Receivables

Funds that customers or clients owe to a business for products or services delivered on credit.