Table 11-4. -Refer to Table 11-4. Suppose the Bank Faces a Reserve

question 359

Multiple Choice

Table 11-4.

-Refer to Table 11-4. Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T-account, a customer deposits an additional $50,000 into his account at the bank. If the bank takes no other action it will

• A) have $65,000 in excess reserves.
• B) have $55,000 in excess reserves.
• C) need to raise an additional $5,000 of reserves to meet the reserve requirement ratio
• D) None of the above is correct.

---

Definitions:

Single-Step

A simplified method used in income statement preparation that aggregates all revenues and subtracts all expenses to calculate net income.

Multiple-Step

A detailed income statement format that separates operational revenue and expenses from non-operational ones to highlight core business profitability.

Statement Of Income

A statement of income is a financial document that summarizes a company's revenues, expenses, and profits or losses over a specific time period.

Freight In

The cost associated with transporting goods into a business, included as part of the inventory cost.