A Bank Has $50,000 in Deposits from Its Checking Account

question 14

Multiple Choice

A bank has $50,000 in deposits from its checking account customers and loans of $49,000. Of the $49,000 loaned out, $43,000 had remained in the checking accounts of the loan recipients but it now has been converted to cash by the loan recipients. The bank had $50,000 cash on hand prior to the remaining loan proceeds being converted to cash, and the reserve requirement is 25%. The reserve ratio for this bank after the remaining loan proceeds are converted to cash is _____, and _____ meeting its reserve requirement.

• A) 14%; it is not
• B) 53.76%; it is
• C) 0.002%; it is not
• D) 20%, it is

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Definitions:

FASB

Stands for Financial Accounting Standards Board, an organization responsible for establishing accounting and financial reporting standards for companies and non-profit organizations in the United States.

Ostensible Authority

Occurs when a hospital leads a patient to believe that a physician with staff privileges is an employee of the hospital.

Surgical Privileges

Authorization granted to a healthcare professional, allowing them to perform specific surgical procedures at a healthcare facility.

Certified Public Accountants

Licensed accounting professionals who have passed a national exam and met state requirements, and are qualified to perform accounting, auditing, and tax services.