If a Check Was Written on Bank a for $100

question 422

Multiple Choice

If a check was written on Bank A for $100 and Bank B presented the check to Bank A for payment, what will happen to the required reserves for each respective bank after payment is made?

• A) Bank A's required reserves increase; Bank B's decrease.
• B) Bank B's required reserves increase; Bank A's decrease.
• C) Both banks will see an increase in their required reserves.
• D) Both banks will see a decrease in their required reserves.

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Definitions:

Recording Error

A mistake made during the process of entering financial transactions into the accounting records.

Bank Service Charge

Fees charged by banks for account maintenance, transactions, and other services provided to customers, often listed in the account statement.

Outstanding Checks

Checks that have been written and recorded in the payer’s ledger but have not yet been cashed or cleared by the bank.

Another Company's Deposit

This refers to funds deposited by one company into the bank account of a different company, often for payment of goods, services, or a joint venture.