When a $10 Check Written on the First National Bank

question 27

Multiple Choice

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

• A) the liabilities of the First National Bank decrease by $10.
• B) the liabilities of the Second National Bank increase by $10.
• C) the reserves of the First National Bank increase by $10.
• D) all of the above occur.
• E) only A and B of the above occur.

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Definitions:

Cash Disbursements

The outflow of cash to pay expenses, purchase assets, or repay debts.

Floor Plan

In finance, it refers to a type of short-term loan used by retailers to purchase high-cost inventory such as automobiles. In architecture, it's the scale diagram of the arrangement of rooms in a building.

Secured Inventory Loan

A loan that is backed by the borrower's inventory as collateral to reduce the lender's risk.