Scenario 16-2 Imagine That Kristy Deposits $10,000 of Currency into Her Checking

question 264

Multiple Choice

Scenario 16-2
Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%.
-Refer to Scenario 16-2.As a result of Kristy's deposit,Bank A can make a maximum loan of

• A) $2,000.
• B) $8,000.
• C) $10,000.
• D) $50,000.

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Definitions:

Building Account

An account used in construction and real estate development to track costs and expenditures related to building projects.

Equipment Account

A ledger account that records transactions related to the purchase, maintenance, and sale of equipment.

Consolidation

The process of combining the financial statements of a parent company and its subsidiaries into one comprehensive financial statement.

Goodwill

A non-physical asset that occurs when a business purchases another business at a cost exceeding the fair market value of its identifiable net assets.