Suppose a Transaction Changes the Balance Sheet of Wells Fargo

question 117

Multiple Choice

Suppose a transaction changes the balance sheet of Wells Fargo bank as indicated in the following T-account. At this point,what percentage of the new deposits does Wells Fargo hold in reserves?

• A)100 percent
• B)10 percent
• C)5 percent
• D)1 percent

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate financial planning.

Activity Variance

Activity variance is the difference between the expected level of activity used to estimate fixed costs and the actual level of activity experienced.

Administrative Expenses

Overhead or general expenses related to the administration of a business, including office salaries, utilities, and legal costs.

Planning Budget

A budget prepared for a planned level of activity; it is used for planning and control purposes within an organization.