Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

If a bank with a required reserve ratio of 15\% receives a deposit of \$600, how much must it hold as required reserves?

$60

$510

$90

$15

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Verified step by step guidance

Understand the concept of required reserves: Banks are required to hold a certain percentage of their deposits as reserves, which is determined by the required reserve ratio. This ensures that banks have enough liquidity to meet withdrawal demands.

Identify the required reserve ratio from the problem: The required reserve ratio is given as 15%, or 0.15 in decimal form.

Determine the deposit amount: The bank has received a deposit of $600, which will be used to calculate the required reserves.

Apply the formula for required reserves: Required reserves = Deposit amount × Required reserve ratio. Using MathML, the formula can be expressed as

Required Reserves = Deposit Amount \times Required Reserve Ratio

Substitute the values into the formula: Replace the deposit amount with $600 and the required reserve ratio with 0.15 to calculate the required reserves.