If a customer deposits $1,000 cash into her checking account, the bank's
A)assets rise by $1,000 and liabilities fall by $1,000.
B)assets fall by $1,000 and liabilities rise by $1,000.
C)assets and liabilities both fall by $1,000.
D)assets and liabilities both rise by $1,000.
E)profits rise by $1,000.

Question

Quizplus · Accepted Answer

When a customer deposits cash into a checking account, the bank's assets increase by the amount of the deposit because it now holds more cash. Simultaneously, the bank's liabilities increase by the same amount because it owes the customer that money in their account.

If a Customer Deposits $1,000 Cash into Her Checking Account