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3 years ago

What does a fractional reserve banking system mean?

2 answers:

3 0

Fractional reserve banking is the practice where a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities.

Damm [24]3 years ago

3 0

One that keeps only a small part of customers' deposits on hand

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The transactions of Spade Company appear below. Kacy Spade, owner, invested $100,750 cash in the company in exchange for common

Furkat [3]

Answer:

Kacy Spade, owner, invested $100,750 cash in the company in exchange for common stock.

Dr Cash 100,750

Cr Common stock 100,750

The company purchased office supplies for $1,250 cash.

Dr Supplies 1,250

Cr Cash 1,250

The company purchased $10,050 of office equipment on credit.

Dr Equipment 10,050

Cr Accounts payable 10,050

The company received $15,500 cash as fees for services provided to a customer.

Dr Cash 15,500

Cr Fees earned 15,500

The company paid $10,050 cash to settle the payable for the office equipment purchased in transaction

Dr Accounts payable 10,050

Cr Cash 10,050

c. The company billed a customer $2,700 as fees for services provided.

Dr Accounts receivable 2,700

Cr Fees earned 2,700

The company paid $1,225 cash for the monthly rent.

Dr Rent expense 1,225

Cr Cash 1,225

The company collected $1,125 cash as partial payment for the account receivable created in transaction

Dr Cash 1,125

Cr Accounts receivable 1,125

f. The company paid a $10,000 cash dividend to the owner (sole shareholder).

Dr Dividends 10,000

Cr Cash 10,000

Cash Common stock

debit credit debit credit

100,750 100,750

1,250

15,500

10,050

1,225

1,125

10,000

94,850

Supplies Equipment

debit credit debit credit

1,250 10,050

Accounts payable Fees earned

debit credit debit credit

10,050 15,500

10,050 2,700

0 0 18,200

Accounts receivable Rent expense

debit credit debit credit

2,700 1,225

1,125

1,575

Dividends

debit credit

10,000

5 0

3 years ago

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the

Leviafan [203]

Answer:

b. demand in more elastic than the supply.

Explanation:

Elasticity is defines as the measure of responsiveness of quantity demanded and supplied to changes in price.

In a situation where demand is more elastic than supply and tax is imposed, the suppliers can bear more cost due to tax without the quantity changing by much.

On the other hand when taxes are applied if sellers want to move it to buyers that have elastic demand, it will result in a big fall in the quantity demanded.

So the seller's bear the cost in this scenario because demand is elastic and will fall with small price increase.

6 0

3 years ago

The amount to be recorded as the cost of an asset under a finance lease is equal to the present value of the lease payments or t

Rashid [163]

Answer:

whichever is lower

Explanation:

Any assets cost is recorded at present value or fair value, whichever is lesser. This is analogous to stock being valued at cost price or sale price, whichever is less.

The reason behind is Prudence or Conservatism principle of accounting. The principle states that anticipated losses should be accounted for, but the anticipated gains should not be accounted for.

So, the asset value is recorded at the least value of the alternative valuations.

7 0

3 years ago

Liam is considering putting money in an investment plan that will pay him $52,000 in 12 years. If Liam’s opportunity cost rate i

Margarita [4]

Answer:

a) The Maximum Liam should be willing to pay is $23,089

Explanation:

The maximum amount Liam should be willing to pay for the investment is the present value of the future amount of 52,000 discounted at 7%.

The present value of a future sum is its worth in today's terms.This represents how much Liam should be offered now to make him indifferent about the choice of receiving $52,000 in the future.

For example, It is the amount that should be invested today at 7% to become $52,000 in 12 years time.

The present value (PV) of a future sum (FV) can be ascertained using the formula below:

PV = FV × (1+r)^(-n)

PV = 52,000× (1+0.07)^(-12)

= 52,000×0.4440

= 23,088.62

= $23,089

The Maximum Liam should be willing to pay is $23,089

6 0

3 years ago

The Coase theorem states that, in the presence of externalities, a market economy will:

Vinil7 [7]

Answer:

d) reach an efficient solution if transaction costs are sufficiently low and property rights are well-defined.

Explanation:

Coase theorem states that the elected parties are able to find the efficient solution for externalities if the transaction cost are low.

Main points of Coase theorem

1) Parties able to find efficient solution when affected by externality

2) Transaction cost must be low but practically it rarely low so in that case coase theorem sometimes inapplicable

4 0

3 years ago