Statement I: Very Large Banks Have to Hold 10% of Their

question 179

Multiple Choice

Statement I: Very large banks have to hold 10% of their demand deposits over $55.2 million on reserve.
Statement II: A bank that does not hold sufficient reserves can borrow reserves from another bank that has some excess reserves,or it can borrow at the discount window of its Federal Reserve District Bank.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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Definitions:

Bank Reconciliation

The process of matching and balancing figures in accounting records with those displayed on a bank statement.

Outstanding Checks

Checks that have been written and recorded in the account ledger but have not yet been cashed or cleared by the bank.

Debit Memorandum

A document issued by a buyer to a seller indicating a deduction from the amount payable to the seller, often due to returned goods or errors.

Internal Control Problems

Issues or weaknesses in a company's processes that threaten its ability to ensure accurate financial reporting, compliance with laws, and effective and efficient operations.