Asked by Angelica Bihasa on May 13, 2024
Verified
A compensating balance occurs when a bank may require a company to maintain a maximum cash balance.
Compensating Balance
A requirement by some banks requiring depositors to maintain minimum cash balances in their bank accounts.
- Master the techniques used by banks and companies to oversee and report their cash and cash equivalents.
Verified Answer
AC
Aditya ChauhanMay 18, 2024
Final Answer :
False
Explanation :
A compensating balance occurs when a bank requires a company to maintain a minimum cash balance as a condition for extending a loan or line of credit, not a maximum balance.
Learning Objectives
- Master the techniques used by banks and companies to oversee and report their cash and cash equivalents.