52. Each of the following typically falls into the category of loans except:

commercial and industrial (business).

53. Which of the following adjustments are made to gross loans and leases to obtain net loans and leases?

Loan and lease loss allowance and unearned income is subtracted from gross loans.

Loan and lease loss allowance is added to gross loans.

Unearned income is subtracted from gross interest received

Investment income is added to gross interest received

Loan and lease loss allowance is subtracted from gross loans and investment income is added to gross interest received.

55. 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:

provision for possible loan losses.

None of the options are correct.

56. A financial institution's bad-debt reserve, as reported on its balance sheet, is called

allowance for possible loan losses.

customer liability on acceptances.

None of the options are correct.

57. 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?

None of the options are correct.

58. ___________ is calculated by deducting noninterest expense and provision for loan losses from noninterest income.

Net income after provision for possible loan losses

Income or loss before income taxes

59. The account that is built up by annual noncash expense deductions and is subtracted from Gross Loans on the Report of Condition is:

allowance for possible loan losses.

None of the options are correct.

60. Nonperforming loans are credits on which any scheduled loan repayments and interest payments are past due for more than:

None of the options are correct

61. One-time-only transactions that often involve sale of financial assets or real property pledged as collateral behind a loan and upon which the bank has foreclosed, affect a bank's account known as:

provision for loan and security losses.

None of the options are correct.

62. The use of fixed assets, rather than financial assets, in order to increase the operating earnings is known as:

plant and equipment investment.

None of the options are correct

63. Banks depend heavily upon borrowed funds supplied by customers with little owners' capital invested. This means that banks make heavy use of:

None of the options are correct.

64. When a loan is considered uncollectible, the bank's accounting department will write (charge) it off the books by reducing the ______ and the ______ accounts. Which choice below correctly fills in the blanks in the preceding sentence?

None of the options are correct.

65. The common banking practice of selling those investment securities that have appreciated in order to reap a capital gain and holding onto those securities whose prices have declined is known as:

selective portfolio management.

None of the options are correct

66. Noninterest revenue sources for a bank are called:

None of the options are correct.

67. Large U.S. banks must use which of the methods listed below to determine their provision for loan loss expense?

None of the options are correct

68. A bank's temporary lending of excess reserves to other banks is labeled on the balance sheet as:

securities purchased for resale.

None of the options are correct.

69. A bank sells shares of its common stock with a par value of $100 for $200 in the market. Which two accounts on the bank's balance sheet are going to be affected?

Common stock outstanding and surplus accounts

Retained earnings and surplus accounts

Subordinated notes and debentures and commons stock outstanding accounts

Retained earnings and common stock outstanding accounts

Only the common stock outstanding account

70. A bank which starts with ALL of $1.48 million at the beginning of the year, charges off worthless loans of $0.94 million during the year, recovers $0.12 million on loans previously charged off and charges current income for a $1.02 million provision for loan losses, will have an ALL at the end of the year of:

The same amount as at the beginning of the year.

71. A bank has total interest income of $67 million and total noninterest income of $14 million. This bank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net interest income?

None of the options are correct.

72. A bank has total interest income of $67 million and total noninterest income of $14 million. This bank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net noninterest income?

None of the options are correct

73. A bank has total interest income of $67 million and total noninterest income of $14 million. This bank has total interest expenses of $35 million and total noninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net income?

None of the options are correct.

74. Which of the following financial statements shows the revenues and expenses of a bank over a set period of time?

The Statement of Stockholders Equity

The Report of Financial Condition

None of the options are correct

75. Which of the following accounts is also called the bank's primary reserves?

Cash and deposits due from banks

None of the options are correct.

76. Which of the following assets is the largest asset item on the bank's balance sheet?

None of the options are correct

[[BM] Chap 5 - Rose

Authored by Nhu Uyen

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

25. On a bank's income statement (Report of Income) deposit costs are financial inputs.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

26. Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

27. Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

28. The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

29. Securities income is a financial output listed on a financial institution's Report of Condition.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

30. Net loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

31. When a loan is classified as nonperforming, any accrued interest recorded on the books, but not actually received, must be deducted from the bank's loan revenues.

True

False

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[[BM] Chap 5 - Rose

25. On a bank's income statement (Report of Income) deposit costs are financial inputs.

26. Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.

27. Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition

28. The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.

29. Securities income is a financial output listed on a financial institution's Report of Condition.

30. Net loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.

31. When a loan is classified as nonperforming, any accrued interest recorded on the books, but not actually received, must be deducted from the bank's loan revenues.

32. In U.S. banking, securities gains are treated as an ordinary income.

33. Most banks report securities gains as a component of their total noninterest income.

34. A bank displaying trading-account securities on its balance sheet is serving as a security dealer
and plans to sell those securities before they reach maturity.

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[[BM] Chap 5 - Rose

25. On a bank's income statement (Report of Income) deposit costs are financial inputs.

26. Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.

27. Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition

28. The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.

29. Securities income is a financial output listed on a financial institution's Report of Condition.

30. Net loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.

31. When a loan is classified as nonperforming, any accrued interest recorded on the books, but not actually received, must be deducted from the bank's loan revenues.

32. In U.S. banking, securities gains are treated as an ordinary income.

33. Most banks report securities gains as a component of their total noninterest income.

34. A bank displaying trading-account securities on its balance sheet is serving as a security dealerand plans to sell those securities before they reach maturity.

Access all questions and much more by creating a free account

Similar Resources on Wayground

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34. A bank displaying trading-account securities on its balance sheet is serving as a security dealer
and plans to sell those securities before they reach maturity.