A Cheque for $10,000 Drawn on Bank a by a Depositor

question 35

True/False

A cheque for $10,000 drawn on Bank A by a depositor and deposited in Bank B will increase the excess reserves in Bank B by $10,000.

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Definitions:

Issued Common Stock

Equity shares that have been distributed to shareholders by the company.

Cash Dividends

are payments made by a corporation to its shareholders from profits in the form of cash, reflecting a portion of the corporate earnings being distributed.

Note Payable

A financial obligation or a loan that is documented through a formal agreement stating repayment terms.

Noncash Financing

Financing activities that do not involve cash flows, but rather the exchange of non-cash items or liabilities, such as issuing stock for assets or converting debt to equity.