The effect of transaction when cash is paid into the bank is?
- bank balance decrease and cash balance increase
-
cash balance decrease and bank balance increase
- bank balance decrease and cash balance decrease
- cash balance increase and bank balance increase
The correct answer is: B
Explanation
When cash is paid into the bank, the cash balance decreases because you are taking cash out of your possession and depositing it into the bank. On the other hand, your bank balance increases because you are adding money to your bank account. Therefore, the effect of the transaction is that the cash balance decreases and the bank balance increases.