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FIN4324 Chapter 5 questions and answers 2024
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FIN4324 Chapter 5 questions and answers 2024
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FIN4324 Chapter 5 questions andanswers 2024
51. Bank assets fall into each of the following categories except:
A) Loans.
B) Investment securities.
C) Demand deposits.
D) Noninterest cash and due from banks.
E) Other assets.Answer: C
52. Banks generate their largest portion of income from:
A) Loans.
B) Short-term investment.
C) Demand deposits.
D) Long-term investments.
E) Certificates of deposit.Answer: A
53. Loans typically fall into each of the following categories except:
A) Real estate.
B) Consumer.
C) Commercial and Industrial (business).
D) Agricultural.
E) Municipal.E
54. Which of the following adjustments are made to gross loans and leases to obtain net loans and
leases?
A) The loan and lease loss allowance is subtracted from gross loans
B) Unearned income is subtracted from gross interest received
, C) Investment income is added to gross interest received
D) A and B.
E) A. and C.D
55. An example of a contra-asset account is:
A) The loan and lease loss allowance.
B) Unearned income.
C) Buildings and equipment.
D) Revenue bonds.
E) The provision for loan loss.A
56. The noncash expense item on a bank's Report of Income designed to shelter a bank's current
earnings from taxes and to help prepare for bad loans is called:
A) Short-term debt interest
B) Noninterest expense
C) Provision for taxes
D) Provision for possible loan losses
E) None of the above.D
57. A financial institution's bad-debt reserve, as reported on its balance sheet, is called:
A) Unearned income or discount
B) Allowance for possible loan losses
C) Intangible assets
D) Customer liability on acceptances
E) None of the aboveB
58. When a bank serves as a security dealer for certain kinds of securities (mainly federal, state, and
local government obligations) the value of these securities is usually recorded in what account on a
bank's Report of Condition?
A) Investment Securities
B) Taxable and Tax-Exempt Securities
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