The accounting entry of the institutions who borrow federal funds is as ___________?
Correct answer: C. liability on balance sheet
- A. income in income statement
- B. expense on income statement
- C. liability on balance sheet
- D. assets on balance sheet
Explanation
Federal funds are borrowed reserves, so the borrowing institution records an obligation to repay them. That obligation appears as a liability on the balance sheet, not as income or an asset.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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