Suppose a Goldsmith (Banker)received an Additional Number of Gold Coins

question 233

Multiple Choice

Suppose a goldsmith (banker) received an additional number of gold coins to put in his safe and had stopped making loans.What would be happening to his reserve ratio?

• A)It would be rising.
• B)It would be falling.
• C)It would stay the same.
• D)There is not enough information to answer this question.

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Definitions:

Short-Term Obligation

A debt or other financial obligation that is due to be paid within one year or within the entity's operating cycle if longer.

Long-Term Liability

Obligations or debts due in more than one year, reflecting a company's financing activities and including loans, bonds payable, and lease obligations.

GAAP Requirements

The standards or guidelines for financial accounting and reporting that accountants are required to follow, known as Generally Accepted Accounting Principles.

Vacation Pay

Compensation paid to employees for days they are entitled to take off work but choose to work instead or as a benefit for days they are allowed not to work.