Question 1

When discussing financial institutions,what is a shrinking capital base?

Accepted Answer

A)  When an institution's credit rating is downgraded
B)  When the institution gives out a lot of large loans
C)  When the institution experiences a large influx of new equity
D)  When the amount of debt in relation to equity increases
E)  When the institution loses a large quantity of its customers in a short amount of timeF) A) and E)
G) A) and B)

Question 2

A savings account is the same thing as a money market account.

Accepted Answer

A) True 
 B)False

Question 3

Another name for a checking account is a

Accepted Answer

A)  demand deposit.
B)  money market account.
C)  time deposit.
D)  mutual fund.
E)  cash account.F) C) and D)
G) A) and D)

Question 4

The primary business of savings and loan associations has been

Accepted Answer

A)  making loans to large corporations.
B)  savings accounts and mortgages.
C)  loans to foreign governments.
D)  insuring deposits.
E)  selling life insurance.F) All of the above
G) A) and E)

Question 5

When inflation is very high,money is no longer a ______ means of exchange.

Accepted Answer

A)  stable
B)  portable
C)  durable
D)  divisible
E)  difficult to counterfeitF) B) and D)
G) None of the above

Question 6

Advantages of direct deposits of paychecks and other income to consumers include convenience,safety,and potential interest earnings.

Accepted Answer

A) True 
 B)False

Question 7

To carry out its function of controlling the supply of money,the Federal Reserve Board

Accepted Answer

A)  uses financial policy.
B)  uses monetary policy.
C)  prints money.
D)  taxes issues.
E)  destroys old money.F) B) and D)
G) C) and D)

Question 8

The Federal Reserve provides national check processing.

Accepted Answer

A) True 
 B)False

Question 9

Discuss what coverage the Federal Deposit Insurance Corporation (FDIC)provides to banking institutions.

Accepted Answer

The FDIC insures individual bank account...

Question 10

Because the U.S.government promises that its metallic coins and paper money are legally acceptable as a means of exchange for products,they are considered which type of money?

Accepted Answer

A)  Far
B)  Credit
C)  Near
D)  Illegitimate
E)  FiatF) B) and D)
G) B) and C)

Question 11

The banking industry has been able to keep up with rapid advances in technology.

Accepted Answer

A) True 
 B)False

Question 12

The oldest and largest of all financial institutions are

Accepted Answer

A)  commercial banks.
B)  credit unions.
C)  savings & loans.
D)  insurance companies.
E)  thrift institutions.F) A) and D)
G) B) and C)

Question 13

Finance companies buy and sell stocks and bonds for their customers.

Accepted Answer

A) True 
 B)False

Question 14

If employees of a local school district conduct their financial business through the same financial institution that they own and only they are allowed to join,the institution is probably a(n)

Accepted Answer

A)  commercial bank.
B)  credit union.
C)  savings and loan association.
D)  insurance company.
E)  federal bank.F) A) and D)
G) A) and E)

Question 15

Define monetary policy and list what tools the Federal Reserve has available for use if the money supply grows too quickly for too long.

Accepted Answer

Monetary policy refers to methods used f...

Question 16

An example of electronic funds transfers (EFT)is using an automated teller machine to withdraw cash.

Accepted Answer

A) True 
 B)False

Question 17

The financial institution that traditionally concentrated on long-term loans,such as mortgages,and is sometimes called a thrift,is a(n)

Accepted Answer

A)  commercial bank.
B)  credit union.
C)  savings and loan association.
D)  mutual bank.
E)  insurance company.F) A) and B)
G) B) and C)

Question 18

The most important characteristic of money is its acceptability for purchase of goods and services.

Accepted Answer

A) True 
 B)False

Question 19

Money market accounts differ from interest-bearing checking accounts in that

Accepted Answer

A)  owners can write only a limited number of checks,and there may be a minimum amount allowed for each check.
B)  owners can take out their funds whenever they want in whatever amount they want.
C)  owners cannot withdraw the funds before the end of a specified interval.
D)  they cannot be converted into cash.
E)  owners cannot withdraw the funds without advance notice.F) B) and E)
G) A) and D)

Question 20

Certificates of deposit are accounts with funds that usually cannot be withdrawn without advance notice and/or have limits on the number of withdrawals per period.

Accepted Answer

A) True 
 B)False

Exam 15: Accounting and Financial Statements

Discuss what coverage the Federal Deposit Insurance Corporation (FDIC)provides to banking institutions.

Correct AnswerverifiedThe FDIC insures individual bank account...View AnswerShow Answer

Define monetary policy and list what tools the Federal Reserve has available for use if the money supply grows too quickly for too long.

Correct AnswerverifiedMonetary policy refers to methods used f...View AnswerShow Answer

The financial institution that traditionally concentrated on long-term loans,such as mortgages,and is sometimes called a thrift,is a(n)

Correct AnswerverifiedShow Answer

Another name for a checking account is a

Correct AnswerverifiedShow Answer

A savings account is the same thing as a money market account.

Correct AnswerverifiedShow Answer

To carry out its function of controlling the supply of money,the Federal Reserve Board

Correct AnswerverifiedShow Answer

Advantages of direct deposits of paychecks and other income to consumers include convenience,safety,and potential interest earnings.

Correct AnswerverifiedShow Answer

Money market accounts differ from interest-bearing checking accounts in that

Correct AnswerverifiedShow Answer

The primary business of savings and loan associations has been

Correct AnswerverifiedShow Answer

Finance companies buy and sell stocks and bonds for their customers.

Correct AnswerverifiedShow Answer

An example of electronic funds transfers (EFT)is using an automated teller machine to withdraw cash.

Correct AnswerverifiedShow Answer

Certificates of deposit are accounts with funds that usually cannot be withdrawn without advance notice and/or have limits on the number of withdrawals per period.

Correct AnswerverifiedShow Answer

If employees of a local school district conduct their financial business through the same financial institution that they own and only they are allowed to join,the institution is probably a(n)

Correct AnswerverifiedShow Answer

The Federal Reserve provides national check processing.

Correct AnswerverifiedShow Answer

Because the U.S.government promises that its metallic coins and paper money are legally acceptable as a means of exchange for products,they are considered which type of money?

Correct AnswerverifiedShow Answer

The most important characteristic of money is its acceptability for purchase of goods and services.

Correct AnswerverifiedShow Answer

The banking industry has been able to keep up with rapid advances in technology.

Correct AnswerverifiedShow Answer

When inflation is very high,money is no longer a ______ means of exchange.

Correct AnswerverifiedShow Answer

When discussing financial institutions,what is a shrinking capital base?

Correct AnswerverifiedShow Answer

The oldest and largest of all financial institutions are

Correct AnswerverifiedShow Answer

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The FDIC insures individual bank account...
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Monetary policy refers to methods used f...
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