If a bank increases the amount of cash it has in its vault,its reserves would ________,liabilities would ________,and owner's equity would ________.
A) increase; stay the same; increase
B) decrease; stay the same; increase
C) increase; decrease; decrease
D) increase; stay the same; decrease
E) decrease; increase; decrease

Question

Quizplus · Accepted Answer

When a bank increases the amount of cash it has in its vault, its reserves increase. Liabilities would stay the same because the bank's total deposits would not be affected. Increasing reserves would not directly impact owner's equity, but the overall financial health of the bank would be strengthened, which could indirectly lead to an increase in owner's equity.

If a Bank Increases the Amount of Cash It Has