Accounting entry of institutions who borrows federal funds is as

A. income in income statement

B. expense on income statement

C. liability on balance sheet

D. assets on balance sheet

Answer: Option C

Solution(By Examveda Team)

Accounting entry of institutions who borrows federal funds is as liability on balance sheet. Federal funds, often referred to as fed funds, are excess reserves that commercial banks and other financial institutions deposit at regional Federal Reserve banks; these funds can be lent, then, to other market participants with insufficient cash on hand to meet their lending and reserve needs.