The journal entry to record a credit sale is Accounts Receivable. Credit sale is nothing butthe customers pay at the time of buying.
Most modern banking systems are based on Fractional reserves.
Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank.
1. In a fractional reserve banking system banks can create money through the lending process.
2. A fractional reserve banking system is susceptible to bank panics.
3. Bank panics are a risk of fractional reserve banking, but are unlikely when banks are highly regulated and lend prudently.
Among the first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829-32.
As per the provisions of Section 12 of the Banking Regulation Act, 1949, the minimum ratio should be 4:2:1.
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