QUESTION 11 Suppose that a new customer opens a checking account and a saving ac

Question

QUESTION 11 Suppose that a new customer opens a checking account and a saving account, placing $50,000 in each. Later, the bank makes a loan of $100,000 to a business firm. For this bank 0 a. assets increased by $100,000 because the checking and saving accounts are assets, and liabilities increased by $100,000 because the loan is a liability Obassets increased by s50.000 because the saving account is an asset, while liabilities increased by $50.000 because the checking account is a liability. C assets remained unchanged but liabilities increased by $100,000 because of the loan. d. checking and saving accounts are liabilities QUESTION 12 business owner appliles for a bank oan to launch a fairly loW-his project. Aften receiving the loan, she cancelis the iow-risk project and instead uses the borrowed funds for a high-rsk venture. This is an example df

Explanation / Answer

The answer is D-) assets increased by $100000 because the loan is an asset to a bank and liability increased by $100000 because the checking and saving are liabilties for a bank.

explanation.

becasue, the loan is term to be an asset becuase, it will get paid by the borrower by the date of maturity and thus it will be an asset to a bank becuase it will get paid in future and saving account are checking account are the liabilites for a bank because, the bank has to give the payment to thier bank account holders when they demand for it. thus it is a liability for a bank.

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