Final answer:
The reserves account on a bank's balance sheet is the money kept on hand by the bank as required by the Federal Reserve and does not record direct investment, portfolio investment, or short-term capital movements. The correct account for tracking international investments would be the financial account in a country's balance of payments.
Step-by-step explanation:
The statement that the reserves account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries is false. The reserves account, as mentioned in the context of a bank's balance sheet, refers to the funds that a bank keeps on hand and does not lend or invest, known as reserve requirements. These funds are either kept in the bank's vaults or at the Federal Reserve Bank. This reserve requirement is set by the Federal Reserve to ensure banks have enough liquidity to meet withdrawal demands and to influence bank behavior through monetary policy. Additionally, a bank might hold reserves above the required minimum, which is excess reserves. On the other hand, when talking about a country's balance of payments, the financial account (not the reserves account) would record transactions that involve international investments, including direct investment, portfolio investment, and short-term capital movements.