If We Both Have Chequing Accounts in the Same Chartered

question 128

Multiple Choice

If we both have chequing accounts in the same chartered bank and I write a cheque in your name for $200, the bank's:

• A)balance sheet will be unchanged.
• B)cash reserves and demand deposits will both decline by $200.
• C)liabilities will decline by $200, but its net worth will increase by $200.
• D)assets and liabilities will both decline by $200.

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Definitions:

Standard Cost

A predetermined cost of manufacturing, servicing, or marketing goods, used as a benchmark to measure performance.

External Financial Statement Reporting

The process of preparing and disclosing financial statements to external stakeholders, such as investors, creditors, and regulatory bodies, to provide insight into a company's financial health.

Generally Accepted Accounting Principles

A set of rules and standards for financial reporting that companies in the U.S. must adhere to.

Gross Profit

The financial gain made after deducting the cost of goods sold from total revenue.