Compensating Balances Are a Way for Banks to Recover the Cost

question 48

True/False

Compensating balances are a way for banks to recover the cost of corporate services provided, but not directly charged.

---

Definitions:

Service Fee

A charge for the provision of a service, often separate from the cost of goods sold.

FOB Destination

A shipping term indicating that the seller bears freight charges and retains ownership of goods in transit until they are delivered and accepted by the buyer.

Perpetual Inventory System

A method of inventory management where updates are made continuously to record sales and purchases.

Credit Memo

A document issued by a seller that reduces the amount owed by a buyer, typically due to a return or rebate.