If Guy and Laraine Both Have Chequing Accounts at the Same

question 41

Multiple Choice

If Guy and Laraine both have chequing accounts at the same bank and Guy writes a cheque for $1,000,payable to Laraine,what will happen to the bank's accounts?

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

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Definitions:

Single-Column Purchases Journal

An accounting journal used to record all purchase transactions of a business in a single column, typically for the purchase of inventory on credit.

Cash Payments Journal

A business ledger that documents every payment or cash disbursement made by a company.

General Journal

An accounting journal where all types of transactions are initially recorded, before being posted to specific accounts in the ledger.

Accounting System

A systematic process used by entities to track financial transactions and summarize financial data.