Question

how will the withdrawal initially change the t-account of the local bank? use the accompanying chart to illustrate the changes.

Answer 1

The withdrawal of funds from a local bank will reduce the amount of deposits in the bank's T-account, leading to a decrease in liabilities and reserves.

Step-by-step explanation:

The withdrawal of funds from a local bank will initially change the bank's T-account by reducing the amount of deposits in the liabilities section of the balance sheet.

For example, if a bank had $10 million in deposits, and a student withdraws $1 million, the amount of deposits in the liabilities section of the T-account will decrease to $9 million.

The balance sheet will reflect this change in the T-account by reducing the bank's liabilities and the corresponding decrease in the amount of cash held as reserves.