Suppose a New Customer Opens a Checking Account and a Savings

question 39

Multiple Choice

Suppose a new customer opens a checking account and a savings account in a commercial bank,placing $200,000 in each.Later,the bank loans the customer $200,000.For this bank,

• A)assets increased by $200,000 and liabilities increased by $100,000.
• B)assets increased by $100,000 because the loan is an asset and liabilities increased by $100,000 because the checking deposit is a liability.The savings deposit is neither an asset nor a liability.
• C)liabilities increased by $200,000 since the checking account and the savings account are liabilities while it generated no new assets.
• D)assets increased by $200,000 because the loan is an asset and liabilities increased by $400,000 because both the checking deposit and the savings deposit are liabilities to the bank.