If a Bank Has Excess Reserves of $20,000 and Demand

question 137

Multiple Choice

If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000,and if the reserve requirement is 20 percent,then the bank has total reserves of

• A)$16,000.
• B)$20,000.
• C)$26,000.
• D)$36,000.

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Definitions:

Standard Costing System

A cost accounting method that assigns fixed costs to products or services based on standard estimated costs.

Inventories

Assets held for sale in the ordinary course of business, or goods in the production process or materials to be consumed in the production process or in the rendering of services.

Historical Data

Data from past periods, used for analysis, forecasting, or research to understand trends, patterns, or outcomes.

Mature Production Process

Indicates a manufacturing or production process that has reached a stage of optimization and efficiency through experience and adaptation.