When a $10 Check Written on the First National Bank

question 135

Multiple Choice

When a $10 check written on the First National Bank of Chicago is deposited in an account at Citibank,then

• A)the liabilities of the First National Bank decrease by $10.
• B)the reserves of the First National Bank increase by $10.
• C)the liabilities of Citibank decrease by $10.
• D)the assets of Citibank decrease by $10.

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Definitions:

Overstated

A term used when financial statements or records reflect a higher amount than what is accurate or true.

Cost of Goods Sold

Straightforward expenses incurred in the manufacture of merchandise a company sells, involving costs of materials and labor.

Days' Sales

A financial metric that estimates a company's average collection period for receivables, often expressed in days.

Solvency

The ability of a company to meet its long-term debts and financial obligations.