You Deposit $4,000 in Currency in Your Checking Account

question 200

Multiple Choice

You deposit $4,000 in currency in your checking account. The bank holds 20 percent of all deposits as desired reserves. As a direct result of your deposit, your bank will make loans and by so doing will create

• A) $1,600 of new money.
• B) $200 of new money.
• C) $3,200 of new money.
• D) $800 of new money.

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Definitions:

Internal Control

Actions and procedures a company adopts to ensure the fidelity of its financial and accounting narratives, boost accountability, and inhibit fraudulence.

Information And Communication

The processes and tools used to collect, transmit, store, and process data to facilitate decision-making and coordination within an organization.

Debit Memo

An adjustment notice sent to suppliers indicating a reduction in the amount due, typically for returned goods or invoice errors.

Miscellaneous Expense

Costs incurred by a business that don't fit into standard expense categories.