Q&A Hero

Q: ​Banks generally ____ loans and ____ their purchases of low-risk securities when the economy is weak. a. ​increase; increase b. ​reduce; reduce c. ​increase; reduce d. ​reduce; increase

Q: A company entered into the following transactions during April. A. Signed a lease and made a payment of $4,500 to the landlord comprised of the current months rent of $1,500 and the required $3,000 security deposit. B. Purchased equipment on account for $35,000. C. Purchased supplies for $6,500 on account. D. Performed services and received cash of $57,000. E. Performed services on account for $28,000. F. Received a payment of $24,000 for services to be performed in the future. G. Collected $14,000 from customers on account. H. Paid employees $11,000 for work done during the month. I. Made a $35,000 payment on account for equipment that was purchased above. J. Made a payment of $6,500 on account for the supplies purchased above. K. Received bills for the current month from telephone and electricity companies totaling $3,800; payments will be made next month. Required: Prepare journal entries for the transactions set forth above.

Q: A bank's net interest margin is commonly defined as a. interest revenues minus interest expenses. b. (interest revenues minus interest expenses)/total assets. c. (interest revenues minus interest expenses)/total liabilities. d. (interest revenues minus interest expenses)/capital.

Q: The Pet Sitters, Inc. entered into the following transactions during the month of January. A. Purchased supplies for $5,000 cash. B. Paid $4,480 for salaries and wages for the month of January. C. Paid $480 in advance for February rent. D. Provided $12,000 in services on account. E. Paid $800 on accounts payable. F. Received $210 from customers as deposits for future pet sitting services. G. Received a bill for $1,500 from the plumber who repaired a broken pipe in the restrooms, but will not pay the bill until February. H. Purchased equipment for cash of $780. Required: Prepare journal entries to record the transactions identified among activities (A) through (H).

Q: ​Other things being equal, assets with shorter maturities have ____ durations. Assets that generate more frequent coupon payments have ____ durations. a. ​shorter; longer b. ​shorter; shorter c. ​longer; shorter d. ​longer; longer

Q: Sprinkler Blowout Company entered into the activities listed in the table below. The companys chart of accounts appears below the list of activities. For each activity, decide whether a transaction has occurred, and, if so, indicate the account(s) that should be debited and the account(s) that should be credited in the related journal entry by entering the appropriate account number(s) in the Debit and Credit columns in the table. If the activity is not a transaction, enter the word None in the Debit column for that activity. The account numbers to be used in the journal entry prepared for the first transaction are provided as an example. Activity Debit Credit Example: Collected cash from customers paying off their accounts. 5 2 A. Performed services for customers this month for cash. B. Purchased supplies on credit. C. Purchased a building, paying part cash and signing a note for the rest. D. Paid insurance premium for six months of coverage beginning next month. E. Accepted customer orders for services to be performed next month; no cash collected. F. Made payment to suppliers on account. G. Collected from customers for work to be performed next month. H. Hired an employee. I. Paid this months rent. Acct. # Account Title Acct. # Account Title 1 Accounts Payable 9 Land 2 Accounts Receivable 10 Note Payable 3 Rent Expense 11 Prepaid Insurance 4 Buildings 12 Service Revenue 5 Cash 13 Unearned Revenue 6 Common Stock 14 Supplies 7 Insurance Expense 15 Salaries and Wages Expense 8 Income Taxes Payable 16 Salaries and Wages Payable

Q: The performance of a bank that continually concentrates on short-term deposits in euros and adjustable-rate dollar loans with equal rate sensitivity is a. unaffected if euro interest rates increase and U.S. rates decrease. b. unaffected if U.S. interest rates increase and euro interest rates decrease. c. adversely affected if euro interest rates increase and U.S. rates decrease. d. adversely affected if U.S. interest rates increase and euro rates decrease. e. unaffected if euro interest rates increase and U.S. rates decrease AND unaffected if U.S. interest rates increase and euro interest rates decrease.

Q: Match the letter and the blank in each transaction description to complete the analysis. Not all terms will be used and some terms may be used more than once. TRANSACTION 1. A company pays wages. This is recorded as a(n) ________ to Cash and a(n) ________ to Salaries and Wages Expense. 2. A company is paid for a job completed last month. This is recorded as a debit to ________ and a credit to ________. 3. A restaurant buys and immediately uses ingredients. This is recorded as a(n) ________ to an expense account and a(n) ________ to Cash. 4. A customer pays in advance for services to be performed during the next month. This is recorded as a ________ to Cash and a ________ to ________. 5. A company receives cash for a job that was completed during the current month. This is recorded as a debit to ________ and a credit to ________. TERM A. debit B. credit C. Accounts Payable D. Accounts Receivable E. Cash F. Notes Payable G. Service Revenue H. Supplies I. Unearned Revenue

Q: If a bank expects interest rates to consistently ____ over time, it will consider allocating most funds to rate-____ assets. a. decrease; sensitive b. decrease; insensitive c. increase; insensitive d. None of these are correct.

Q: Indicate whether a debit (dr) or credit (cr) would be used to increase each of the following accounts. 1. _____ Prepaid Rent 2. _____ Sales Revenue 3. _____ Salaries and Wages Expense 4. _____ Service Revenue 5. _____ Unearned Revenue 6. _____ Accounts Receivable 7. _____ Retained Earnings 8. _____ Supplies Expense

Q: ​When measuring exposure to market risk, banks commonly use the ________. a. ​value-at-risk method b. ​operating leverage measure c. ​matching maturity method d. ​forward rate method

Q: A company entered into the following transactions during April. Required: Complete the following table by indicating the amount and effect of each transaction on the accounting equation. Transaction Assets Liabilities Stockholders Equity A. Signed a lease and made a payment of $4,500 to the landlord comprised of the current months rent of $1,500 and the required $3,000 security deposit. B. Purchased equipment on account for $35,000. C. Purchased supplies for $6,500 on account and used them immediately. D. Performed services and received cash of $57,000. E. Performed services on account for $28,000. F. Received a payment of $24,000 for services to be performed in the future. G. Collected $14,000 from customers on account. H. Paid employees $11,000 for work done during the month. I. Made a $35,000 payment on account for equipment that was purchased above. J. Made a payment of $6,500 on account for the supplies purchased above. K. Received bills for the current month from telephone and electricity companies totaling $3,800; payments will be made next month.

Q: Banks can reduce their credit risk by restructuring their asset portfolio to contain fewer ____ and more ____. a. Treasury bonds; corporate bonds b. Treasury bonds; municipal bonds c. Treasury bonds; commercial loans d. None of these are correct.

Q: Pandey Inc. had the following activities during the month: A. Borrowed $7,000,000 cash, signing a promissory note. B. Bought a building for $800,000, paying $200,000 in cash and signing a promissory note for $600,000. C. Rented equipment at a cost of $10,000 per month and issued a check covering six months rent. D. Provided $104,000 of services and billed customers. E. Purchased $30,000 of supplies on account. F. Received a utility bill for the current period in the amount of $1,200. G. Raised sales prices on 200 units from $400 per unit to $440 per unit. H. Received a 50% deposit from a customer on a $20,000 order to be filled next month. Required: Analyze each of the activities (A) through (H) above with the goal of indicating their effects on the basic accounting equation by completing the table below. Indicate the accounts and amounts involved. Include a plus (+) or minus (-) sign before each number to show its effect on the accounting equation. If the activity should not to be recorded as a transaction, enter the word None in the first column for that activity. Assets Liabilities Stockholders Equity Account(s) +/ Amount Account(s) +/ Amount Account(s) +/ Amount A B C D E F G H

Q: If Bank A has a negative gap and Bank B has a positive gap, which of the following is true? a. Bank A is favorably affected by rising interest rates. b. Bank B is favorably affected by falling interest rates. c. Bank A is adversely affected by falling interest rates. d. None of these are correct.

Q: The following activities took place during the month of November at a corporation that operates a shoe repair shop. 1. Salaries and wages in the amount of $33,000 are paid to employees. 2. On the last day of November, the company acquires equipment on account of $55,000. 3. Payment of $375 made on account to a consulting firm for services received from that firm during October. 4. Payment of $12,000 made at the beginning of November for six months of rent; the period covered by the payment begins in November. 5. Utility bills in the amount of $125 arrive in the mail; the bills will not be paid until December. Required: Indicate what accounts would be used to record the initial transaction arising from each activity.

Q: A bank has the following asset and liability portfolios. What is the gap? Rate-sensitive assets Amount (in millions) Rate-sensitive liabilities Amount (in millions) Floating-rate loans $4,000 NOW accounts $1,750 Floating-rate mortgages 1,000 MMDAs 4,500 Short-term Treasury securities 1,500 $6,500 Short-term CDs 1,000 $7,250 a. $750 million b. -$750 million c. 1.12 d. .896 e. None of these are correct.

Q: The following activities took place during the month of November at a corporation that operates a clothing store. 1. Salaries and wages in the amount of $33,000 are paid to employees. 2. On the last day of November, the company acquires equipment on account of $55,000. 3. Payment of $375 made on account to a consulting firm for services received from that firm during October. 4. Payment of $12,000 made at the beginning of November for six months of rent; the period covered by the payment begins in November. 5. Utility bills in the amount of $125 arrive in the mail; the bills will not be paid until December. Required: For each activity, indicate the amount of expense that would be recorded in November.

Q: Which of the following is NOT a likely method used by a bank to reduce interest rate risk? a. maturity matching b. using fixed-rate loans c. using interest rate futures contracts d. using interest rate caps

Q: The following activities took place during the month of July at a corporation that earns service revenue as a law firm. 1. The law firm completes legal work relating to a real estate transaction and is paid $5,500 when the papers are signed. 2. Legal work in the amount of $26,000 is performed on account for customers. 3. A customer makes a payment of $2,500 on account for legal services that were performed last month. 4. A new client calls to request assistance in filing the documents for a patent; a fee of $3,000 is paid and the parties agree that the work will commence next month. 5. A client pays a retainer (deposit) of $15,000 for legal work; one-third of the work is performed in the current month and the remainder will be provided over the next two months. 6. The law firm borrows $10,000 from a local bank. Required: Indicate what accounts would be used to record the initial transaction arising from each activity.

Q: The following activities took place during the month of July at a corporation that earns service revenue as a law firm. 1. The law firm completes legal work relating to a real estate transaction and is paid $5,500 when the papers are signed. 2. Legal work in the amount of $26,000 is performed on account for customers. 3. A customer makes a payment of $2,500 on account for legal services that were performed last month. 4. A new client calls to request assistance in filing the documents for a patent; a fee of $3,000 is paid and the parties agree that the work will commence next month. 5. A client pays a retainer (deposit) of $15,000 for legal work; one-third of the work is performed in the current month and the remainder will be provided over the next two months. 6. The law firm borrows $10,000 from a local bank. Required: For each activity, indicate the amount of revenue that would be recorded in July.

Q: ​For most banks, the average duration of assets ____ the average duration of liabilities, so the duration gap is ____. a. ​exceeds; zero b. ​exceeds; negative c. ​exceeds; positive d. ​is less than; negative

Q: If a bank that relies heavily on short-term deposits for its funds replaces its investment in long-term Treasury securities with more floating-rate commercial loans, it is likely that the bank's exposure to a. credit risk would decrease. b. credit risk would increase. c. interest rate risk would increase. d. None of the above.

Q: Assume that a company uses accrual basis accounting. For each of the following, indicate the effect the situation would have on net income in the current period. SITUATION 1. _____ Recording prepaid costs as current expenses 2. _____ Recording an expense at more than the actual cost 3. _____ Failing to record the receipt of a payment by a customer on account 4. _____ Failing to record some supplies received 5. _____ Recording unearned revenue as revenue 6. _____ Recording an expense as revenue 7. _____ Failing to record the company issuing additional shares of its own common stock IMPACT ON NET INCOME O Overstate net income U Understate net income N/A Not applicable; no effect on net income

Q: As the secondary market for loans has become active, banks can attempt to satisfy their liquidity needs with a ____ proportion of loans while achieving ____ profitability. a. higher; higher b. lower; lower c. higher; lower d. lower; higher

Q: Carls Catering just completed its first year of operations. During the year, the following events took place. Customer payments in the amount of $64,000 were received at the time the catering services were performed. Additional catering services totaling $35,000 were performed on account for customers; payments amounting to $6,000 were received from those customers. On the last day of the year, a local company paid $3,000 for catering services to be performed in 30 days. Employee wages totaled $25,000 and were paid in cash. The costs of food, beverages, and supplies used when catering services were performed amounted to $26,000 and were paid for in cash. (Note: Categorize these costs as cost of goods sold.) Unpaid bills for delivery costs during the year amounted to $1,000 and were on hand at the end of the year. On the last day of the year, the company paid $12,000 in advance for rent on office space. Required: Part a. Determine the net income for Carls Catering on a cash basis. Part b. Determine the net income for Carls Catering on an accrual basis.

Q: A gap ratio of less than 1.00 suggests that a. rate-sensitive assets exceed rate-sensitive liabilities. b. an increase in interest rates would increase the bank's net interest margin. c. rate-sensitive liabilities exceed rate-sensitive assets. d. a decrease in interest rates would decrease the bank's net interest margin. e. an increase in interest rates would increase the bank's net interest margin AND a decrease in interest rates would decrease the bank's net interest margin.

Q: Jims Gymnastics Trainings operations for the month of October are summarized as follows: A. Provided $5,000 of training to students on account. B. Received $4,000 cash from students for training provided in October. C. Received $1,000 cash for training to be provided in November. D. Received $3,000 cash from students on account for training provided in September. E. Paid Septembers gym rental bill on account in the amount of $1,000. F. Received Octobers rental bill of $1,500; set it aside. Required: Part a. Determine the net income for October using the cash basis of accounting. Part b. Determine the net income for October using the accrual basis of accounting.

Q: Macon Bank has interest revenues of $5 million, interest expenses of $4 million, and assets totaling $20 million. Macon Bank's net interest margin is a. $1 million. b. -$1 million. c. 5 percent. d. -5 percent.

Q: Net income refers to the: A) difference between what was earned and the costs incurred during a period. B) difference between the cash received and the cash paid out during a period. C) difference between what is owned and what is owed at a point in time. D) change in the value of the company during a period.

Q: ​During a period of rising interest rates, a bank's net interest margin will likely ____ if its liabilities are ____ its assets. a. ​increase; more rate sensitive than b. ​decrease; more rate sensitive than c. ​increase; equally rate sensitive as d. ​decrease; equally rate sensitive as

Q: A company has total revenue of $560,000 and total expenses of $330,000. If the company overstates sales by $10,000, what is the effect on the companys net profit margin? A) Net profit margin would be overstated. B) Net profit margin would be understated. C) Net profit margin would be unaffected. D) Net profit margin cannot be computed because overstating sales is unethical.

Q: For a commercial bank, when the average duration of assets exceeds the average duration of liabilities, the duration gap is a. zero. b. positive. c. negative. d. either b or c, depending on the maturities of the assets.

Q: An increase in operating expenses would have which of the following effects on a company's profit margin? A) Net profit margin would increase. B) Net profit margin would decrease. C) Net profit margin would remain unchanged. D) There is not enough information given to determine the effect.

Q: Which of the following statements about net profit margin is not correct? A) If a companys net profit margin increases from 15% to 20% this would be considered an improvement in profitability. B) A company with a net profit margin of 10% is using 90% of each dollar of revenue to cover costs and expenses. C) Net profit margin indicates how much net income is earned for every dollar of revenue. D) A company with a net profit margin of 10% may be evaluated differently depending upon which industry it is in.

Q: A company has sales revenues of $200,000 and expenses of $50,000. What is its net profit margin? A) 4 B) 25% C) 75% D) $150,000

Q: Banks can increase their potential interest revenues by restructuring their asset portfolio to contain fewer ____ and more ____. a. Treasury bonds; commercial loans b. Treasury bonds; excess reserves c. consumer loans; Treasury bills d. None of these are correct.

Q: Which of the following is an example of an error that would cause the trial balance to be out of balance? A) A journal entry was posted as a debit to Cash for $525 and a credit to Accounts Receivable for $552. B) A journal entry was posted as a debit to Cash and a credit to Sales Revenue when the company received a $400 payment from a customer on account. C) A purchase of supplies on account for $100 was posted as a debit to Supplies for $10 and a credit to Accounts Payable for $10. D) A $350 transaction was not recorded at all.

Q: Because riskier assets offer ____ returns, a bank's strategy to increase its return will typically entail a(n) ____ in the overall credit risk of its asset portfolio. a. lower; increase b. lower; decrease c. higher; increase d. higher; decrease e. None of these are correct.

Q: The unadjusted trial balance: A) is a preliminary financial statement for external and internal users. B) generally lists account names in alphabetical order. C) is created to determine that total debits equal total credits. D) indicates whether or not errors were made in recording transactions.

Q: The risk of a loss due to closing out a transaction is referred to as ____ risk. a. credit b. settlement c. interest rate d. exchange rate e. None of these are correct.

Q: The ____ of interest rate futures ____ the potential adverse effect of rising interest rates on a bank's interest expenses. a. sale; increases b. sale; reduces c. purchase; reduces d. sale; increases AND purchase; reduces

Q: Which of the following statements about the unadjusted trial balance is not correct? A) It might only include a preliminary amount for income tax expense. B) It might balance even if there is a mistake. C) It does not yet include end-of-the-accounting period adjustments. D) It is part of the financial statements issued to external decision makers.

Q: In a sensitivity analysis using a bank's stock return, an interest rate proxy, and market returns, a ____ coefficient for the interest rate variable suggests that the banks performance is ____ affected by ____ interest rates. a. positive; adversely; rising b. positive; favorably; declining c. negative; adversely; rising d. negative; favorably; rising

Q: Which of the following practices would not be considered ethical? A) Failing to record an expense even though cash has been paid. B) Recording 31 days of sales in April. C) Using the cash basis of accounting. D) Adjusting the accounts after a trial balance has been prepared.

Q: Banks can improve their liquidity position by restructuring their asset portfolio to contain fewer ____ and more ____. a. excess reserves; Treasury bills b. Treasury bonds; corporate bonds c. loans; Treasury bills d. None of these are correct.

Q: Which of the following statements about the accounting cycle is correct? A) A trial balance is included in the full set of external financial statements. B) If debits equal credits in the unadjusted trial balance, you have made no errors in preparing and posting journal entries. C) The balances for each account reported on an unadjusted trial balance are determined by adding the amounts on the + side and subtracting the amounts on the side of each ledger or T-account. D) GAAP allows companies to choose between cash basis and accrual basis of accounting.

Q: ​Other things being equal, assets with ____ maturities and ____ frequent coupon payments have longer durations. a. ​shorter; more b. ​shorter; less c. ​longer; more d. ​longer; less

Q: Consider the following information from a companys unadjusted trial balance at December 31, 2015. All accounts have normal balances. Accounts Receivable $ 4,500 Accounts Payable 650 Cash 1,700 Service Revenue 5,500 Common Stock 4,000 Equipment 4,900 Insurance Expense 400 Land 3,800 Notes Payable, Due 2018 4,000 Notes Receivable, Matures 2016 1,200 Prepaid Insurance 400 Rent Expense 1,400 Retained Earnings, January 1, 2015 7,850 Salaries and Wages Expense 3,700 What is the total of the debit side of the unadjusted trial balance? A) $22,000. B) $17,350. C) $16,500. D) $13,500.

Q: If a bank has a ____ duration gap, its average asset duration is probably ____ than its liability duration. a. zero; smaller b. positive; larger c. negative; larger d. None of these are correct.

Q: Which of the following statements about the unadjusted trial balance is not correct? A) trial balance is an internal report used to determine whether total debits equal total credits. B) A trial balance lists every account name in one column, usually in the order of assets, liabilities, stockholders equity, revenues and expenses. C) A trial balance shows the ending balances obtained from the ledger listed in either the debit or credit column. D) You can assume that no errors were made in the recording of transactions if total debits equal total credits on the unadjusted trial balance.

Q: Which of the following is the correct sequence of steps in the accounting cycle? A) Preparation of journal entries, posting to T-accounts, preparation of financial statements, and preparation of unadjusted trial balance. B) Posting to T-accounts, preparation of journal entries, preparation of unadjusted trial balance, and preparation of financial statements. C) Preparation of journal entries, posting to T-accounts, preparation of unadjusted trial balance, and preparation of financial statements. D) Preparation of financial statements, preparation of journal entries, posting to T-accounts, preparation of unadjusted trial balance.

Q: Leskar Bank has $2 million in rate-sensitive liabilities and $3 million in rate-sensitive assets. Leskar's gap ratio is ____. a. 1.5 b. 0.67 c. $1 million d. None of these are correct.

Q: ​Bank A has interest revenues of $4 million, interest expenses of $5 million, and assets totaling $20 million. Bank A's net interest margin is a. ​$1 million. b. ​-$1 million. c. ​-5 percent. d. ​5 percent.

Q: Use the information above to answer the following question. What is the amount to be reported as total liabilities on the balance sheet at the end of January? A) $4,750. B) $4,150. C) $8,150. D) $8,500.

Q: Use the information above to answer the following question. What is subtotal of expenses that will be reported on the income statement for the month ended January 31? A) $3,750. B) $7,900. C) $8,150. D) $4,500.

Q: During a period of ____ interest rates, a bank's net interest margin will likely ____ if its liabilities are more rate sensitive than its assets. a. decreasing; decrease b. increasing; increase c. decreasing; increase d. increasing; remain stable

Q: Use the information above to answer the following question. What is the amount of total revenue to be reported on the income statement for the month of January? A) $45,000. B) $9,000. C) $29,000. D) $25,000.

Q: Crazer Bank has a profit after taxes of $2 million, total assets of $100 million, and shareholders' equity of $10 million. Crazer's return on equity (ROE) is ____ percent. a. 18 b. 210 c. 15 d. 20 e. None of these are correct.

Q: Use the information above to answer the following question. Which of the following statements about the recording of these transactions is correct? A) Transaction #1 would include a debit to Service Revenue. B) Transaction #3 would include a debit to Accounts Receivable. C) Transaction #4 would include a debit to Accounts Receivable. D) Transaction #6 would include a debit to Unearned Revenue.

Q: Use the information above to answer the following question. As a result of these transactions, what is the amount of the increase to the Cash account? A) $9,700. B) $13,200. C) $2,200. D) $7,200.

Q: ​Petri Bank had interest revenues of $70 million last year and $30 million in interest expenses. About $300 million of Petri's $800 million in assets are rate sensitive, while $600 million of its liabilities are rate sensitive. Petri Bank's net interest margin is ____ percent. a. ​4.0 b. ​3.6 c. ​6.7 d. ​5.0

Q: Use the information above to answer the following question. What is the amount of revenue that will be reported on the income statement for the month ended July 31? A) $5,300. B) $5,700. C) $4,300. D) $7,200.

Q: Which of the following statements is NOT correct? a. Managers may be tempted to make decisions that are in their own best interests rather than shareholder interests. b. Directors of a bank determine whether loan applications should be approved. c. To prevent agency problems, some banks provide stock as compensation to managers. d. The underlying goal behind the managerial policies of a bank is to maximize the wealth of the bank's shareholders

Q: Use the information above to answer the following question. Which of the following is the journal entry that will be used to record activity #4? A) Debit Operating Expense and credit Cash for $5,000 B) Debit Accounts Payable and credit Cash for $5,000 C) Debit Accounts Payable and credit Operating Expense for $5,000 D) Debit Cash and credit Accounts Payable for $5,000

Q: ​When a bank makes an international loan containing a clause that allows repayment in a foreign currency, the bank is exposed to a. ​loan settlement risk. b. ​exchange rate risk. c. ​global exchange risk. d. ​currency transaction risk.

Q: Use the information above to answer the following question. Which of the following is the journal entry that will be used to record activity #3? A) Debit Cash and credit Unearned Revenue for $2,500 B) Debit Unearned Revenue and credit Advertising Revenue for $2,500 C) Debit Cash and credit Accounts Receivable for $2,500 D) Debit Unearned Revenue and credit Receivable for $2,500

Q: The duration of zero-coupon bonds will be ____ the duration of coupon bonds with the same maturity. a. lower than b. higher than c. the same as d. either a or b (depending on the size of the coupon payment)

Q: Use the information above to answer the following question. Which of the following is the journal entry that will be used to record activity #1? A) Debit Advertising Revenue and credit Accounts Receivable for $55,000 B) Debit Accounts Receivable and credit Cash for $55,000 C) Debit Accounts Receivable and credit Advertising Revenue for $55,000 D) Debit Cash and credit Advertising Revenue for $55,000

Q: Use the information above to answer the following question. What is the amount of revenue that will be reported on the income statement for the year ended December 31, 2016? A) $57,500. B) $39,000. C) $55,000. D) $50,000.

Q: Floating-rate loans completely eliminate interest rate risk.a. Trueb. False

Q: Use the information above to answer the following question. What is the balance of Accounts Receivable at December 31, 2016? A) $51,896. B) $55,000. C) $44,600. D) $54,396.

Q: When determining the appropriate interest rate to charge on a loan, a bank uses the Federal Reserves primary credit rate as a benchmark and adds a premium to this rate for less creditworthy customers. a. True b. False

Q: Use the information above to answer the following question. What is the balance in the Cash account at December 31, 2016? A) $46,116. B) $41,516. C) $10,416. D) $46,916.

Q: For most banks, the average duration of liabilities exceeds the average duration of assets, so the duration gap is positive. a. True b. False

Q: Which account is least likely to be credited when an expense is recorded? A) Cash B) Accounts Payable C) An account with the word Prepaid in its title D) Accounts Receivable

Q: If the duration of all of a banks assets with a maturity of greater than one year is similar to that of its liabilities with a maturity greater than one year, interest rate risk is nonexistent. a. True b. False

Q: Sparkling Pools received a bill for $1,200 for running newspaper ads during the last two weeks of July; the bill will be paid on August 1. Advertising Expense should be: A) credited for $1,200 in July. B) credited for $1,200 in August. C) debited for $1,200 in July. D) debited for $1,200 in August.

Q: Which of the following is an "off-balance-sheet commitment? a. long-term debt b. additional paid-in capital c. notes payable d. standby letters of credit backing commercial paper issued by firms

Q: On December 31, 2015, Hoosier Inc. paid $10,000 to rent a storage facility from July 1, 2016 to July 1, 2017. Which of the following statements about the effect of this transaction on Hoosier financial statements is correct? A) Prepaid Rent in the amount of $10,000 will be reported as a liability on the balance sheet at December 31, 2015. B) Rent Expense in the amount of $10,000 should be reported on the income statement for the year ended December 31, 2015. C) The income statement for the year ended December 31, 2015 is unaffected by this transaction. D) The balance sheet at December 31, 2016 will not report any assets relating to this transaction.