If John and Todd Both Have Chequing Accounts in the Same

question 128

Multiple Choice

If John and Todd both have chequing accounts in the same commercial bank and John writes a cheque for $5,000 payable to Todd,what will happen to the bank's accounts?

• A)They will not be affected.
• B)Assets and liabilities will both decrease by $5,000.
• C)Liabilities will decrease by $1,000,and the bank's equity will increase by $5,000.
• D)Reserves and demand deposits will both decrease by $5,000.
• E)Demand deposits will increase by $5000 and loans to customers will decrease by $5,000.

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