When a bank suspects that a $1 million loan might prove to be bad debt that will have to be written off in the future the bank
A) can set aside $1 million of its earnings in its loan loss reserves account.
B) reduces its reported earnings by $1, even though it has not yet actually lost the $1 million.
C) reduces its assets immediately by $1 million, even though it has not yet lost the $1 million.
D) reduces its reserves by $1 million, so that they can use those funds later.
Answer: A
Economics
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