Question

My sister has been given a loan for $10,000, and she deposited the full loan amount into her checking account. How would this be reflected on her bank’s balance sheet?
a.Loans would be unaffected, but deposits would increase by $10,000.
b.Loans would increase by $10,000, but deposits would decrease by less than $10,000.
c.Loans and deposits would be unaffected.
d.Loans and deposits would increase by the same amount as the deposit.
e.Loans would decrease and deposits would increase by the same amount as the deposit.

Answer 1

Answer:

The correct answer is D

Explanation:

Checking account is an account at the bank against that checks can be drawn by the depositor. In this account, an individual deposits the money or can spend the money.

In this case, she gave a loan of amount $10,000 and also deposited the full amount of the loan into the checking account. So, this will affect the loans as well as the deposits as both will increase with the same amount as the deposit.