Any Bank That Uses Deposits to Make Loans

question 132

Multiple Choice

Any bank that uses deposits to make loans:

• A)operates on a 100 percent reserve system.
• B)operates on a fractional reserve system.
• C)does not operate on a reserve system.
• D)does not keep reserves in its vaults.
• E)charges an interest rate determined by the reserve ratio.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor used to create the product.

Inventory

The total value of a company's raw materials, work-in-process, and finished goods that are considered a current asset on the balance sheet.

FIFO Method

"First In, First Out," an inventory valuation method where goods first purchased or produced are the first to be sold or used.

Inventory Records

Documentation that tracks the quantity, purchase costs, and sale prices of products available for sale, crucial for accurate inventory management and financial reporting.