Question 1

In a fractional reserve banking system

Accepted Answer

Fractional reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Fractional reserve banking is a banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties.

Question 2

Compounding interest means interest accrues

Accepted Answer

more quickly than simple interest

Question 3

Which investment type typically carries the least risk?

Accepted Answer

Different types of risk exist in ivesting schemes depending on what you've invested in. Savings accounts are generally regarded as the least risky investments as in this we just save our wealth for future expenses.

Question 4

The credit balance in the bank account is

Accepted Answer

Bank credit balance meant that the banker is laible to paid us. And if we have a credit balance accouding to bank statement is mean we have " cash at bank" and in our book we show in the assets side but bank show laiblities side. Hence, The credit balance in the bank account is the amiunt we have in our account and we are eligible to withdraw that.

Question 5

Most financial investments are examples of what type of risk?

Accepted Answer

Most financial investments are examples of Human risk type of risks. Since, we humans invest in any kind of financial investments on our own risk expecting profits.

Question 6

The interest-rate effect suggests that

Accepted Answer

an increase in the price level will increase the demand for money, increase interest rates, and decrease consumption and investment spending.

Question 7

An increase in the price of product A will

Accepted Answer

If the price of a product rises, the demand for the substitute product increases.

Question 8

Which of the following best describes Accounting?

Accepted Answer

is an information system that provides reports to its stakeholders regarding economic activities and the condition of the business

Question 9

The accounting process is correctly sequenced as

Accepted Answer

Identifying→recording→communicating

Question 10

Which of the following can increase your credit card’s APR?

Accepted Answer

APR means Annual Percentage Rate. Creditcards apr can be increased when you missed credit card payments.

Question 11

Purchase return and allowances is a contra account

Accepted Answer

Purchase return and allowances is a contra account to purchases.

Question 12

Who is responsible to pay back all debts?

Accepted Answer

government

Question 13

A capital expenditure results in a debit to

Accepted Answer

an asset account

Question 14

Which of the following statements about minimum payments is incorrect?

Accepted Answer

If you send in the minimum payment, you will be charged a late fee

Question 15

In recording an accounting transaction in a double-entry system

Accepted Answer

the amount of the debits must equal the amount of the credits.

Question 16

Which of the following is a type of savings vehicle?

Accepted Answer

Both B & C

Question 17

Automatic stabilizers refer to

Accepted Answer

government spending and taxes that automatically increase or decrease along with the business cycle.

Question 18

OMO refers to

Accepted Answer

Open Market Operations (OMO) refer to the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system

Question 19

The balance of an account is determined by

Accepted Answer

The balance of an account is determined by the difference of credits amount and debits amount in the sheet.

Question 20

Which best describes the difference between stocks and bonds?

Accepted Answer

stocks are more reliable investment;bonds tend to be more volatile

Accounting and Finance Questions