1. A checking account is A. A liability to a commercial bank B. An asset to a co

ID: 1097070 • Letter: 1

Question

1. A checking account is

A. A liability to a commercial bank

B. An asset to a commerical bank

C. A liability to the household or firm that has the account

D. An asset for the Federal Reserve System

2. The Board of Governor of the Federal Reserve System is

A. Elected by the general public

B. Composed of seven members who are appointed by the President and approved by the Senate

C. Composed of representatives from the country's 12 largest commerical banks

D. Composed of 12 members of the Senate and the U.S. House of Representatives

1. A - The cash itself is an asset to the bank, but because it can be removed by the accountholder at any time, it is considered to be a liability.

2. B - These individuals are appointed to the Board of Directors by the President.

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