Compensating Balances

question 6

Multiple Choice

Compensating balances

• A) are used by banks as a substitute for charging service fees.
• B) are created by having a sweep account.
• C) generate returns to customers from interest-bearing accounts.
• D) are used to reward new accounts.

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Definitions:

Fixed Asset Value

The net value of a company's physical assets, like buildings and machinery, after accounting for depreciation or impairment.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle, whichever is longer.

Fixed Assets

Fixed assets, also known as non-current assets, are long-term physical assets used in the operations of a business.

Taxable Income

The portion of an individual's or corporation's income used as a basis for calculating the amount of income tax owed to the government.