Chapter 7, Problem 13QE

Financial instruments are assets that have a monetary value or record a monetary transaction. To coordinate the exchange of capital between borrowers and lenders, financial instruments trade in the financial markets. These financial instruments can be categorized on the basis of their issuers, maturity, risk, and other factors. Identify the financial instruments based on the following descriptions. Backed by the U.S. government, these financial instruments are short-term debt obligations with a maturity of less than one year. They are considered risk-free investments.  State and local government bonds, U.S. Tresury, U.S. Tresury notes and bonds Issued by money-centered financial firms, these short- or medium-term insured debt instruments pay higher interest than a regular savings account. They are low-risk instruments and have low returns.     Money Market Mutual Funds, Certificates of Deposit, Commercial Paper These financial instruments are investment pools that buy such…

Which of the following should a bank do if they wish to engage in both security rating and investment banking? Group of answer choices a. Restrict prepublication of analyst reports to research personnel only b. Base compensation for analysts on positive ratings of securities c. Place analysts in the supervisory organization under sales personnel d. All of the above

Which of the following assets are not included in “cash equivalents” in a typical balance sheet?a. Foreign government securitiesb. Certain very low-risk equity securitiesc. U.S. government securitiesd. Time depositse. All of the above might be included in“cash equivalents.”

Which of the following is not a function of a Central Bank? a. To regulate the issue, supply and availability of money. b. To manage the foreign exchange reserves. c. To advise government on monetary and fiscal matters. d. To manage the public and private debt in the country.

Which of the following statements is INCORRECT ? Large investment banks finance most of their activities by using retail consumer deposits as the primary source of funds.  Failure to monitor the actions of firms in a timely and complete fashion after purchasing securities in the firms exposes  investors to agency costs.  As a delegated monitor, a financial institution's actions reduce agency costs. Financial institutions provide economies of scale in transaction costs

As part of the safeguards against imprudent banking, the General Banking Law imposes limits or restrictions on loans and credit accommodations which may be extended by banks. Which of the following are not considered limits and restrictions on loans and credit accommodation? a. NO commercial bank shall make any loan or discount on the security of shares of its own capital stock. b. DOSRI Rules – promulgated by BSP, upon authority of Section 5 of the General Banking Law. c. Anti-Money Laundering Law d. SBL Rules – those promulgated by the Bangko Sentral ng Pilipinas upon authority of Section 35 of the General Banking Law of 2000.

Below are the limitation of financial statements .Please suggest ways to overcome them :-The financial statements contain only past data-The financial statement may not be comparable -The financial statements doesn't account for inflation-The financial statements are prepared on the basis of some assumptions-The financial statement doesn't cover the non-financial aspect of the company

Isn't government stock, from an accounting standpoint, just an ordinary accounting concept with a standard credit balance?

1. Why don’t the additions and deductions from the bank balance on a bank reconciliation require adjustment by the company? 2. Do all transactions by U.S. companies with foreign parties require special accounting procedures by the U.S. companies? Explain.