If the Reserve Ratio Is 10 Percent,$1,400 of Additional Reserves

question 25

Multiple Choice

If the reserve ratio is 10 percent,$1,400 of additional reserves can create up to

• A)$140 of new money.
• B)$14,000 of new money.
• C)$140,000 of new money.
• D)None of the above is correct.

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Definitions:

Financing Activities

Transactions related to borrowing, repaying debts, issuing stocks, and paying dividends that affect a company's cash flow.

Collecting Cash

the process of receiving payment from customers or clients, often involving invoicing, payment processing, and accounting.

Customers

Individuals or entities that purchase goods or services from a business.

Indirect Method

A method used in the Statement of Cash Flows to convert net income into net cash flow from operating activities by adjusting for non-cash transactions and changes in working capital.