Fractional Reserve Banking Refers to a System Where Banks

question 62

Multiple Choice

Fractional reserve banking refers to a system where banks

• A) grant loans to their borrowing customers.
• B) deposit a fraction of their reserves at the central bank.
• C) hold only a fraction of their deposits in their reserves.
• D) accept a portion of their deposits in checkable accounts.

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Definitions:

Adjusting Entry

Accounting records created at the closing of a fiscal period to distribute expenses and revenues to the time they were truly incurred.

General Journal

A basic accounting ledger used to record all types of accounting transactions before they are transferred to specific accounts in the general ledger.

Cash Receipts Journal

A specialized accounting journal used in the double-entry bookkeeping system to keep track of all cash transactions that increase (debit) the cash account.

Horizontal Analysis

This involves comparing financial data over a series of reporting periods to identify trends and growth patterns within a company's operations.