Compensating Balance Agreements That Do Not Legally Restrict the Amount

question 66

Multiple Choice

Compensating balance agreements that do not legally restrict the amount of funds shown on the balance sheet should be reported in the

• A) current asset section.
• B) long-term investment section.
• C) other asset section.
• D) notes of the financial statements.

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Definitions:

Retained Earnings

The sum of a company's earnings up to the present, reduced by any shareholder dividends or distributions.

Total Assets

The sum of all assets owned by a company, including both current and fixed assets, as represented on the balance sheet.

Dividends

Disbursements issued by a company to its shareholders, usually sourced from the organization's earnings.

Income Summary

A temporary account used to transfer the revenues and expenses for an accounting period to the Retained Earnings account.