Q396
Accounting entry of institutions who lends federal funds to other institutions is as
A.
liability on balance sheet
B.
assets on balance sheet
AnswerC.
income in income statement
D.
expense on income statement
Answer: Option B
Solution
Answer: Option B
Solution:
Accounting entry of institutions who lends federal funds to other institutions is as assets on balance sheet. Federal funds are overnight borrowings between banks and other entities to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions.