When a customer deposits $100 into a checking account, the effect is to
A)increase the bank's liabilities.
B)decrease the bank's liabilities.
C)increase the bank's assets.
D)decrease the bank's assets.
E)increase both the bank's liabilities and its assets.

Question

Quizplus · Accepted Answer

When a customer deposits $100 into a checking account, the bank's liabilities increase by $100 because the bank now owes the customer $100. The bank's assets also increase by $100 because the bank now has $100 more in cash.

When a Customer Deposits $100 into a Checking Account, the Effect