Yolanda Took $5,000 from Her Checking Account and Put the Money

question 260

Multiple Choice

Yolanda took $5,000 from her checking account and put the money in her savings account at the same bank. Based on that information, which of these is TRUE?

• A) Both M1 and M2 were reduced by $5,000.
• B) M1 went down by $5,000, but M2 was unchanged.
• C) Neither M1 nor M2 changed because the transfer was done at the same bank.
• D) M1 and M2 both rose by $5,000.

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Definitions:

Impairment Loss

A charge recognized when the carrying amount of an asset exceeds its recoverable amount, reflecting a permanent reduction in the asset's value.

Accumulated Depreciation

The total depreciation that has been recorded against an asset over its useful life, representing the reduction in value of the asset.

Cost Model

An accounting method that values an asset based on its historical cost less any accumulated depreciation and impairment losses.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.