The Main Purpose of the Liquidation Account Is To

question 40

Multiple Choice

The main purpose of the liquidation account is to:

• A) show the capital amount due to contributories.
• B) calculate the deficiency or surplus on liquidation.
• C) show the final cash payment to each class of contributory.
• D) record additional calls made on shareholders.

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Definitions:

Excess Reserves

The reserves held by banks over and above the minimum required by the central bank, available for lending or investment.

Money Supply

The total financial resources existing in an economy at a certain time.

Open Market Operations

These are financial activities where central banks buy or sell government securities in the open market to control the money supply and influence interest rates.

Required Reserve Ratio

The fraction of deposits that a bank is mandated by regulations to hold in reserve and not loan out.