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1 FINANCE MCQS

When an institution lends federal funds, it records them as __________?

  • Liability on balance sheet
  • Income in income statement
  • Assets on balance sheet
  • Expense on income statement
Correct Answer: C. Assets on balance sheet

Detailed Explanation

When a financial institution lends federal funds to another bank, the amount becomes a receivable for the lender. Since receivables represent resources expected to bring future economic benefits, they are recorded as assets on the balance sheet.

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