A Bank Can Only Make a Loan If It Has

question 583

Multiple Choice

A bank can only make a loan if it has

• A) reserves equal to its deposits.
• B) permission from the Federal Reserve.
• C) excess reserves.
• D) a creditworthy customer willing to pay a high interest rate.

---

Definitions:

Estimated Returns Inventory

An accounting method used to estimate the value of goods that are expected to be returned by customers.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting operating expenses, interest, and taxes.

Fiscal Year

A 12-month period used for accounting purposes and planning by organizations, which may not align with the calendar year.

Ledger

A comprehensive collection of a company's financial transactions, divided into individual accounts, and recorded in a way that balances are always maintained across assets, liabilities, and equity.