Table 13.1 XYZ Bank Balance Sheet

question 28

Multiple Choice

Table 13.1 XYZ Bank Balance Sheet
Refer to Table 13.1.If XYZ Bank has a required reserve ratio of 10 percent and loan proceeds are not redeposited,it can legally increase its loans by

• A)$60,000.
• B)$40,000.
• C)$20,000.
• D)$10,000.

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Definitions:

Beginning Balance

The amount of money in an account at the start of a new accounting period.

Credit Side

The section of an account where increases in liabilities, income, and equity are recorded, as opposed to the debit side, which records increases in assets and expenses.

Normal Credit Balance

The usual balance side of an account that increases its value, typically used for liabilities, revenues, and equity accounts.

Withdrawals

Money taken out from a business by its owner(s) for personal use, reducing the owner's equity in the business.