Which of the following statements is false?

Question

BlackTom AI · Accepted Answer

Question restatement: The prompt asks to determine which statement is false among the given options about banking.
Option 1: 'Bank capital is recorded as an asset on the bank balance sheet.' This is incorrect because bank capital represents equity, i.e., the owners' claim on the bank after liabilities are accounted for. Equity is recorded separately from assets on the balance sheet and is not an asset itself. Treating bank capital as an asset would misstate the fundamental accounting equation (Assets = Liabilities + Equity).
Option 2: 'A bank issues liabilities to acquire funds.' This statement is true. Banks raise funds by issuing liabilities such as deposits, issued debt, or other borrowings, which are obligations the bank must repay or settle. This is a standard funding mechanism in banking.
Option 3: 'A bank's assets are its uses of funds.' This is true. Assets are resources controlled by the bank that will bring future economic benefits, effectively representing uses of funds since the bank deploys them in loans, securities, cash, etc.
Option 4: 'The bank's assets provide the bank with income.' This is generally accurate in that many assets (like loans and securities) generate interest or dividends, contributing to the bank's income. While not all asset types directly generate income in every period, the typical role of assets in banking includes earning income.
Summary of reasoning: The only statement that mislabels a fundamental accounting category is Option 1, which incorrectly classifies equity (bank capital) as an asset. The remaining statements correctly describe common banking concepts: funding via liabilities, assets as uses of funds, and income-generating potential of assets.

ECON 206-PTS2-Online Final- Requires Respondus LockDown Browser

Which of the following statements is false?

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Part 1Which of the following is not an asset LOADING... on a bank's balance sheet? Part 2 A. Loans. B. Reserves. C. Government securities. D. Checkable deposits.

In a bank's balance sheet, the main item on the liabilities side is:

A bank holds $1100 in reserves, has $1800 worth of deposits, and has loaned out $800. Apart from these, the bank does not hold any other assets or liabilities. The required reserve ratio is 20%. What is the bank's net worth (in $)?

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ECON 206-PTS2-Online Final- Requires Respondus LockDown Browser

Which of the following statements is false?

查看解析

登录即可查看完整答案

类似问题

Part 1Which of the following is not an asset LOADING... on a​ bank's balance​ sheet? Part 2 A. Loans. B. Reserves. C. Government securities. D. Checkable deposits.

In a bank's balance sheet, the main item on the liabilities side is:

A bank holds $1100 in reserves, has $1800 worth of deposits, and has loaned out $800. Apart from these, the bank does not hold any other assets or liabilities. The required reserve ratio is 20%. What is the bank's net worth (in $)?

更多留学生实用工具

希望你的学习变得更简单

Part 1Which of the following is not an asset LOADING... on a bank's balance sheet? Part 2 A. Loans. B. Reserves. C. Government securities. D. Checkable deposits.