The Required Reserves of a Bank Are Determined by Multiplying

question 76

True/False

The required reserves of a bank are determined by multiplying the bank's checkable deposits by the required reserve ratio.

---

Definitions:

Accrual Basis of Accounting

A financial recording technique that logs income and costs as they are accrued, without considering the actual exchange of cash.

Revenue Recognition

The accounting principle that dictates how and when revenue is considered earned and should be recorded in the financial statements.

Expenses

The outflow of money to pay for goods or services, an essential component of a company's operations.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid, as opposed to the accrual basis.