Jaime Transfers $2,500 from His Checking Account to His Savings

question 237

Multiple Choice

Jaime transfers $2,500 from his checking account to his savings account. This transaction will

• A) decrease both M1 and M2.
• B) not change M1 and decrease M2.
• C) decrease M1 and not change M2.
• D) increase both M1 and M2.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Cash Received

The total amount of cash received by a company during a specific period from all its activities, including operations, investments, and financing.

Direct Method

In accounting, the direct method is a way of reporting cash flows from operating activities by listing major categories of gross cash receipts and payments.

Income Taxes Payable

The amount of federal, state, or local taxes that a company is obligated to pay to the tax authorities, based on its earnings, within the current accounting period.