[The Following Information Applies to the Questions Displayed Below

question 47

Multiple Choice

[The following information applies to the questions displayed below.]
During the month of February,Fadness Company had the following transactions:
(1) Revenues of $225,000 were earned and received in cash.
(2) Bank loans of $18,000 were paid off.
(3) New bank loans of $15,000 were incurred.
(4) Equipment of $40,000 was purchased with cash.
(5) Equipment was sold for its book value of $36,000.Cash was received.
(6) Expenses of $171,400 were paid.
(7) Stockholders purchased additional shares for $50,000 cash.
-A statement of cash flows for February would report an increase in cash of:

• A)($ 4,000).
• B)$47,000.
• C)$53,600.
• D)$96,600.

---

Definitions:

Reserve Requirement

The minimum amount of reserves a bank must hold against deposits, set by the central bank, influencing the money supply and banking stability. A rephrased definition since "Required Reserves" is a similar concept.

Open Market Purchase

An activity by a central bank to buy securities in the open market to increase the money supply and stimulate economic growth.

Money Supply

The collective value of all cash, bank deposits, and liquid financial resources existing in an economy at a particular time.

Secondary Reserves

Assets that are highly liquid but not as liquid as primary reserves; they can quickly be converted into cash or other assets to meet financial obligations.