If the Desired Reserve Ratio Is 20 Percent, the Simple

question 64

Multiple Choice

If the desired reserve ratio is 20 percent, the simple deposit multiplier is ________.

• A) 5.0
• B) 2.5
• C) 4.0
• D) 10.0

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Definitions:

Cost of Goods Sold

The immediate expenses related to manufacturing goods for sale in a business, which encompass both materials and labor costs.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, used to calculate cost of goods sold during the period.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting cost of goods sold.

Perpetual Inventory System

An inventory management system that continuously updates the quantity and value of inventory on hand after each transaction.