Economics · Accounting Principles
The accounting equation serves as the structural basis for double-entry bookkeeping. If a commercial bank decides to write off a Non-Performing Asset (NPA) against its specific provisions held on the liabilities/provisions side, what is the immediate impact on the balance sheet aggregates?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1There is no change in the total of assets or liabilities as it is a pure book entry.
- 2Both total assets and total liabilities decrease by the equivalent amount of the write-off.✓
- 3The total of assets decreases while the total of liabilities remains unchanged.
- 4The total of assets and the total of liabilities both increase by the same amount.
Correct answer
Both total assets and total liabilities decrease by the equivalent amount of the write-off.
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