Latent Functions Are Understood to Be the Unintended Consequences of a System

question 24

True/False

Latent functions are understood to be the unintended consequences of a system designed to serve other purposes.

Comprehend the procedure for posting journal entries to ledger accounts.

Distinguish between the different types of special journals.

Understand the concept of control accounts and their relevance to subsidiary ledgers.

Differentiate between transactions that should be recorded in general and special journals.

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Definitions:

Simple Money Multiplier

The reciprocal of the required reserve ratio, or 1/r; the maximum multiple of fresh reserves by which the money supply can increase.

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve, either in their vaults or with the central bank, not to be used for loans.

Excess Reserves

The excess funds that a bank or financial institution maintains beyond the minimum mandated by regulatory bodies, creditors, or its own internal policies.

Money Supply

The total amount of money—cash, coins, and balances in bank accounts—in circulation within a country's economy at a specific time.