Answer: Departmentalization
Explanation: This is the division of the functions in an organisation into departments.
Each department consist of people that perform the same functions working together. Example, Human Resources Department, Production department, marketing department and so on.
Departmentalization is as a result of the particular function to be carried out by different group of people in an organisation.
The main economic basis of the empire of Mali was derived from the agricultural production of the rural areas. However, the main economic activity that has been preserved in the record is of gold production. What accounts for this disparity?
Answer:
Although traditional agricultural practices were and are still probably the most important economic activity of Mali, they are not able to produce on a large scale to be able to export.
On the other hand, gold is something that most foreign companies and governments want, so the rulers of Mali engaged in gold trade. Since writing was not common in local communities in Mali, a lot of the records and history of Mali was done by foreigners and their main interest was gold.
Which of the following statements is TRUE with regard to gross margin?
A. Gross margin is equal to net sales less cost of goods sold.
B. Gross margin is another term for net income.
C. Gross margin is equal to revenues less operating expenses.
D. Gross margin is the top line of the income statement.
ANSWER: (A)
EXPLANATION: Gross margin is the difference between revenue and cost of goods sold divided by revenue. Gross margin is expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold. Gross Margin is often used interchangeably with Gross Profit, but the terms are different.
Gross margin is equal to net sales less cost of goods sold is true with regard to gross margin. Thus, option (a) is correct.
What is the cost?
The term cost refers to the actual money are spent on the manufacturing of the product. The product are manufacture to spend on money are raw material, transportation, wages, salary, and other expenses add. The all expenses are added to identify the cost.
The difference between revenue and cost of goods sold is the gross margin, which is divided by revenue. The gross margin is given as a proportion. In general, it is computed as the selling price minus the cost of products sold. The terms gross margin and gross profit are sometimes used interchangeably, however, they are not the same.
As a result, the gross margin is equal to net sales less cost of goods sold is true with regard to gross margin. Therefore, option (a) is correct.
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When an additional unit of a variable input adds less to total product than the previous unit, the firm has:
diminishing total returns.
diminishing marginal returns and diminishing total returns.
diminishing marginal returns.
increasing returns.
Answer:
The answer is diminishing marginal returns.
Explanation:
Because, each additional unit of a good adds less to utility than the previous.
Final answer:
The firm experiences diminishing marginal returns when an additional unit of input adds less to the total product than the previous unit, due to the fixed nature of other inputs.
Explanation:
When an additional unit of a variable input adds less to the total product than the previous unit, the firm experiences diminishing marginal returns. This concept is part of the law of diminishing returns, which indicates that as more increments of a resource are added to the production of a good or service, the marginal benefit from those additional increments will decline. This occurs due to the utilization of fixed inputs, which means that after a certain point, each additional unit of variable input contributes less to the overall production, leading to a fall in the marginal product. However, diminishing marginal returns should not be confused with diminishing total returns which would mean the total production actually starts to decrease; typically, during the phase of diminishing marginal returns, total production still increases but at a decreasing rate.
Marsha is single, had gross income of $50,000, and incurred the following expenses: Charitable contribution - $2,000 Taxes and interest on home - 7,000 Legal fees incurred in a tax dispute - 1,000 Medical expenses - 3,000 Penalty on early withdrawal of savings - 250 Her AGI is:
Answer:
Adjusted gross income = $51000
Explanation:
given data
gross income = $50,000
Charitable contribution = $2,000
Taxes and interest = $7,000
Legal fees = $1,000
Medical expenses = $3,000
Penalty = $250
to find out
Adjusted gross income AGI
solution
we get here Adjusted gross income AGI is express as
Adjusted gross income = gross income + Taxes and interest - Charitable contribution - Legal fees - Medical expenses ............................1
put here value we get
Adjusted gross income = $50,000 + $7,000 - $2,000 - $1,000 - $3,000
Adjusted gross income = $51000
Carla Vista Co. issued $590,000, 10-year, 7% bonds at 101. Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 enter an account title to record the sale of these bonds on January 1, 2017 enter a debit amount enter a credit amount enter an account title to record the sale of these bonds on January 1, 2017 enter a debit amount enter a credit amount eTextbook and Media List of Accounts Suppose the remaining Premium on Bonds Payable was $3,540 on December 31, 2020.
Show the balance sheet presentation on this date. CARLA VISTA CO. Balance Sheet (Partial) choose the accounting period select an opening subsection name enter a balance sheet item $enter a dollar amount select between addition and deduction: enter a balance sheet item enter a dollar amount $enter a total of the two previous amounts
Answer:
cash 595,900 debit
bonds payable 590,000 credit
premium on bonds 5,900 credit
Explanation:
We have to record the issuance of the bonds:
cash proceeds:
face value x quote:
590,000 x 101/100 = 595,900
face value (590,000)
premium 5,900
There is a premium as we are receiving more than we are going to pay at maturity.
We will debit the cash proceeds form the bond
and credit the bonds and premium
The journal entry to record the sale of the bonds on January 1, 2017, would be as follows: Cash ($590,000 x 101%). On the balance sheet, the presentation for the remaining Premium on Bonds Payable on December 31, 2020, would be: Premium on Bonds Payable $3,540.
Explanation:The journal entry to record the sale of the bonds on January 1, 2017, would be as follows:
Jan. 1 | Cash ($590,000 x 101%) | 595,900
| Premium on Bonds Payable | 3,900
| Bonds Payable | 590,000
On the balance sheet, the presentation for the remaining Premium on Bonds Payable on December 31, 2020, would be as follows:
Balance Sheet (Partial)
Liabilities:
Bonds Payable $590,000
Premium on Bonds Payable $3,540
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Jax Company uses a perpetual inventory system and on November 30 purchased merchandise for which it must pay the shipping charges. Which of the following is one part of the required journal entry when Jax pays the shipping charges of $200? a). a debit to freight-out for $200 b). a debit to inventory for $200 c). A debit to Delivery Expense for $200 d). A debit to cash for $200
Answer:
b). a debit to inventory for $200
Explanation:
The journal entry is shown below:
Inventory A/c Dr $200
To Cash A/c $200
(Being the shipping charges is paid for cash)
Under the perpetual inventory account, all the expenses which are incurred to bring the product to the destination have come under the inventory account. So, we debited the inventory account and credited the cash account
Central bank policy requires all banks to hold 10% of deposits as reserves. Pacific Bank policy prevents it from holding excess reserves. Suppose banks cannot trade any of the bonds they already have. If the central bank decides to lower the reserve requirement to 9%, which of the following will result?
A. the money supply in the economy decreases
B. decrease of $1 million in Pacific's net worth
C. increase of $1 million in Pacific's loan assets
D. increase of Pacific's bond assets by $1million
Answer:
C. increase of $1 million in Pacific's loan assets
Explanation:
If Pacific Bank does not hold excess reserves, then a decrease in the reserve requirement from 10% to 9% will render more money with the bank to lend.
Therefore, This will increase Pacific's ability to make loans.
Final answer:
Lowering the reserve requirement from 10% to 9% allows banks like Pacific Bank to lend out the excess reserves, thereby increasing its loan assets but not affecting its net worth or bond assets. The correct answer is an increase of $1 million in Pacific's loan assets (C).
Explanation:
When the central bank lowers the reserve requirement from 10% to 9%, banks are allowed to hold less money in reserves and can therefore use more of their deposits for lending or purchasing assets. Pacific Bank, which does not hold excess reserves by policy, would now have additional funds available to create loans because their reserve requirement has decreased. This would lead to an increase in their loan assets.
Specifically, if Pacific Bank was previously required to hold 10% and now only needs to hold 9%, the additional 1% of the deposits can be lent out. This does not directly change Pacific Bank’s net worth or bond assets but increases its loan assets, which in turn can increase the money supply in the economy through the money creation process that banks participate in.
Therefore, the correct answer to what will result from the central bank lowering the reserve requirement to 9% for Pacific Bank is:
C. increase of $1 million in Pacific's loan assets
Motor Sales sold its old office furniture for $ 5,500. The original cost was $ 15,000​, and at the time of​ sale, accumulated depreciation was $ 12,000. What is the effect of this​ transaction?
Answer:
The effect of this transaction is a gain of $2,500 on disposal.
Explanation:
Cost of motor = $15000
Accumulated depreciation = $12000
Net book or carrying value = 15000 - 12000
= $3,000
Income from disposal = $5,500
Gain/(loss) on disposal = $5,500 - $3,000
= $2,500
The effect of this transaction is a gain of $2,500 on disposal.
A security firm is offered $80,000 in one year for providing CCTV coverage of a property. Thecost of providing this coverage to the security firm is $74,000, payable now, and the interestrate is 8.5%. Should the firm take the contract?
Answer:
contract s not acceptable
Explanation:
Given data:
worth of CCTV coverage contract = $ 80,000
Coverage Cost = $ 74,000
Interest rate = 8.5%
Present value of the CCTV coverage is PV
[tex]PV = \frac{$ 80,000}{1.0850} = $ 73,732.72[/tex]
As we can see from above calculation that present value of receivable amount is less than current cost, hence the contract is not acceptable
Lush Lawns, a new landscaping company, uses the same logo and shade of green in all forms of communication including its online ads, truck signage, Web site, and business cards. Which technique is being used by Lush Lawns to promote its business?
A. niche market penetration
B. integrated marketing communications
C. inventory control segmentation
D. global marketing management
E. logistics information management
Answer:
B. integrated marketing communications
Explanation:
Integrated marketing communications refers to a concept in which all the forms of communications used by a company are coordinated in order to be consistent. This can help improve sales and earnings. The technique used by Lush Lawns to promote its business is integrated marketing communications because it is using the same logo and shade of green in all forms of communication which indicates that the company is trying to be consistent through all of them.
The Wacky Widget company has total fixed costs of $100,000 per year. The firm’s average variable cost is $10 for 10,000 widgets. At that level of output, the firm’s average total costs equala. $10 b. $100c. $150 d. $15
Answer:
$20
Explanation:
Average total cost (AC) equals summation of average variable cost (AVC) and average fixed cost (AFC). Average fixed cost is calculated by division of total fixed cost (TFC) by number of widgets (N)
AC=AVC+AFC= AVC-TFC/N = $10+ $100,000/10,000 = $20
Explanation of fixed costs, average variable costs, and average total costs.
Total fixed costs: Fixed costs that do not vary with output level.
Average variable cost: Variable costs divided by the quantity of output produced.
Average total costs: The sum of average fixed costs and average variable costs.
A chemical company makes two brands of antifreeze. The first brand is 40%pure antifreeze, and the second brand is 90%pure antifreeze. In order to obtain 180gallons of a mixture that contains 55%pure antifreeze, how many gallons of each brand of antifreeze must be used?
Answer:
1st brand is 126 gallons
ans 2nd brand = 54 gallons
Explanation:
given data
first brand = 40%
second brand = 90%
mixture = 55%
mixture = 180 gallons
to find out
how many gallons of each brand
solution
we consider here 1st brand is = x and 2nd brand is y
so on mixing we get
total volume = x + y ...............1
put here value
180 = x + y .................2
and mixing equation will be
40 x + 90 y = 55 ( x+ y)
solve it we get
3 x = 7 y
x = [tex]\frac{7}{3}[/tex] y ........................3
put equation 3 in equation 2
180 = [tex]\frac{7}{3}[/tex] y + y
solve it we get
y = 54
and now put in equation 2 we get
180 = x + 54
x = 126
so
1st brand is 126 gallons
ans 2nd brand = 54 gallons
An entrepreneur purchased an existing bicycle shop that had between $120,000 and $150,000 worth of sales annually for the past three years. During the first year under new ownership, there was a devastating winter with numerous snowstorms, so sales, which usually pick up in March, were very low until the beginning of May. There is usually an increase in sales between March 1 and June 30 that accounts for 50 percent of the store’s annual revenue. What would the forecasted sales be for the entrepreneur’s first year? What recommendations do you have for the entrepreneur based on your projection?
Answer:
Forecasted sales: 25% maximum reduction.
Recommendations: try new ways to increase sales during the months left, or reduce its own cost.
Explanation:
If sales usually increase between March 1 and June 30, and this period accounts for 50% of annual revenue, if revenue is proportional to sales, a reduction in sales will reduce revenues. Between March 1 and June 30 there are 4 months. If sales usually pick up in March and this year they were low until the beggining of May, it means that only 2 of the 4 most productive months were higly productive.If 50% of sales are concentrated in this 4 months, and this year 2 of the 4 months were not really productive, a maximum 25% of sales (and hence of revenues) may have lost.Therefore, revenues may lower by 25% this year.To avoid losses, it is advisable to try new ways to increase sales during the months left, that can consist on doing some advertisement and promotions (related to health care linked to exersice for example), that helps increasing sales in the months left, to compensate the looses of the 2 months. If sales cannot be increased, it is advisable to reduce cost to avoid further looses.Jacob is the owner of a film production company. He promotes a healthy work-life balance for his employees. He also encourages them to take vacations when there is less work. He believes that a friendly work environment can be a stimulus for a healthy working experience. He does not reprimand his employees even if they fail to meet important deadlines. In the context of the Blake/Mouton leadership grid, which of the following leadership styles is Jacob using in this scenario?A) The country club styleB) The impoverished styleC) The middle-of-the-road styleD) The authority-compliance styleE) The country club style
Answer:
The country club style.
Explanation:
The country club style is a leadership style in which there is a high concern for people and low concern for the results which means that the manager is interested in his employees' needs and believes that they will work hard if they are in a good working environment. In terms of results, this tends to be a style in which the manager is relaxed and productivity can be low because there isn't a lot of control. According to this, the leadership style that Jacob is using in this scenario is the country club style because he believes that a healthy work environment is important and he doesn't do anything when his employees miss their deadlines.
_________ occurs when an individual or business capitalizes on a price differential for a firm's product between two countries by purchasing the product in the country where prices are lower and reselling it in the country where prices are higher.
a. Arbitrage
b. Predatory pricing
c. Experience curve pricing
d. Speculation
e. Multipoint pricing
Answer:
Correct option is (a)
Explanation:
Arbitrage refers to purchase an asset in one market with an intention to sell the same in another market thereby gaining on difference in price. Profit represents the difference in the market prices of the product in different countries.
So, arbitrage occurs when business take advantage of price differentials of product between two countries.
Predatory pricing is setting the prices of products at a very low level forcing the competitors to leave the market.
Experience curve pricing is again setting price below average cost in expectation that increase in production experience will reduce cost eventually.
Speculation is investing on expectation of rise in price in future.
Selected information from Curl Up and Dye Salon's accounting records and financial statements for 2018 is as follows ($ in millions):
A) Cash paid to acquire equipment $20
B) Treasury stock purchased for cash 22
C) Proceeds from sale of land and buildings 45
D) Gain from the sale of land and buildings 16
E) Investment revenue received 33
F) Cash paid to acquire office equipment 40
On its statement of cash flows, the company should report net cash flows from investing activities of:
A) $15 million net outflow
B) $37 million net outflow
C) $30 million net inflow
D) $1 million net inflow
Answer:
A) $15 million net outflow
Explanation:
The preparation of the cash flows from the investing activities are shown below:
Cash flow from Investing activities
Cash paid to acquire equipment - $20 million
Proceeds from sale of land and buildings $45 million
Cash paid to acquire office equipment -$40 million
Net Cash flow from Investing activities -$15 million
All other transactions are related to the operating activities and financing activities. So, it is not relevant for the computation part. Hence, ignored it
The county commission passed into law through an ordinance a requirement to set aside 5 percent of the county's tourism taxes for tourism campaigns to be started in the upcoming fiscal year. How would the 5 percent in tourism tax revenues be classified in the county's fund balances at the end of the current fiscal year?
a) Committed.
b) Assigned.
c) Restricted.
d) Unassigned.
Answer:
a)
Explanation:
Based on the information provided within the question it can be said that the 5% tourism tax revenues would be classified as committed. This is because this percentage was pledged as part of the policy that was passed into law by the county commission. Therefore this money is dedicated to that policy alone and must be used for that.
Team operating principles are sometimes included in a project charter to enhance team functioning. Which of the following statements accurately describes the value of establishing team operating principles?
a. Operating principles that address the conduct of meetings and how decisions are made are especially useful in helping the team get off to a good start.
b. Operating principles typically detail the specific work that each team member will perform and ensure a more complete understanding of the project.
c. Operating principles identify the rules along with the punishments to be administered when the rules are broken.
d. all of these
Answer:
a. Operating principles that address the conduct of meetings and how decisions are made are especially useful in helping the team get off to a good start.
Explanation:
Operating principles discuss the core of any business by discussing the main steps of operating the business.
This provides for the main principles on which the business would run.
The principles and discussions in the meeting discussing and providing the agenda of the further processing and stepping ahead in business.
This overall efforts for the business, provides a clear picture of how the work shall be started. It guides the team in making efforts in the right direction.
A person in the civilian labor force falls into one of two categories: a. a person who works in a service industry or a person who works in a manufacturing industry. b. unemployed or employed. c. disemployed or unemployed. d. a self-employed worker or a non-self-employed worker.
Answer: (B).
A person in the civilian labor force is either "Unemployed or Employed".
Explanation:
The Bureau of Labor statistics described the civilian labor force as a group of people (civilians) who are either employed or unemployed. It doesn't include; military personnel who are actively serving, handicapped people, Federal government workers, agricultural workers, retired people and discouraged workers, as part of the civilian labor force.
Phillip owns a large real estate firm. He imparts training to the managers of the firm to help them effectively manage its multiethnic workforce. He places emphasis on being flexible and being able to negotiate and solve problems. The managers also receive training on conflict resolution. In the given scenario, Phillip uses _____.
A. skills-based diversity trainingB. diversity awareness trainingC. supervisory diversity trainingD. readiness-based diversity training
Answer:
A. skills-based diversity training
Explanation:
Based on the information provided within the question it seems that Phillip is using skill based diversity training in this scenario. This refers to a training approach that focuses on dealing with diversity in multiethnic workforces and providing the necessary skills to solve various types of problems within them. Which is exactly what is happening in this situation.
Answer:skills based diversity training
Explanation:
All of the following are considered an appropriate basis of accounting other than GAAP except_________.A. The cash basis of accounting.B. A method based on a contractual agreement.C. The basis of accounting used for tax purposes.D. A projection based on a hypothetical assumption.
Answer:b
Explanation:
Bc I said so
Al works as a cement finisher for a parking lot repaving company. He is suspicious of innovation and innovators. He was one of the very last people in the small Western city in which he lives to buy a microwave oven. When it comes to the adoption of microwave ovens, Al is in the _____ category.
Answer:
Al is in the late majority category.
Explanation:
Late majority refers to consumers that are not willing to buy a product until they are sure it has a good performance as they don't want to take risks. These people tend to be resistant to change and they will buy a new product only when most people have already done it. According to this, Al is in the late majority category because he was one of the last people to buy a microwave in the city he lives in and he is suspicious of innovation.
Assume that Wizard Internet is operating as a general partnership, what is Caleb's personal tort liability for Anna's actions within the scope of the business?A. Caleb would only be personally responsible for his own actions, not those of Anna.B. Caleb is personally liable only to the point where Anna could not pay damages.C. Since it is a partnership, neither would have personal liability. Only the business itself would have liability.D. Caleb is personally jointly and severally liable along with Anna.
Answer: The correct answer is "D. Caleb is personally jointly and severally liable along with Anna.".
Explanation: Caleb is personally jointly and severally liable along with Anna. When there is joint and several liability, a person has the right to claim payment of a debt or compensation for damage to any of those responsible or even all of them, without anyone being able to excuse themselves to evade their responsibility.
Final answer:
As a general partnership, Caleb would be personally joint and severally liable along with Anna for any tort actions committed by Anna within the scope of the business.
Explanation:
Wizard Internet, operating as a general partnership, would make Caleb personally joint and severally liable along with Anna for any tort actions committed by Anna within the scope of the business. This means that Caleb and Anna would be individually responsible for the full amount of damages, regardless of whether one party can pay or not. Caleb would not be only responsible for his own actions, but also for Anna's actions as a partner in the business.
When the government enacts policies to redistribute income,
the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal.
the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal.
the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient.
the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.
Answer:
The objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.
Arnold Marion, a firstminus year economics student at Fazer College, was given an assignment to find an example of price discrimination and present it to his class. When asked for his example Arnold said "I went to a Milwaukee Brewers baseball game with my cousin last week. We paid $25 each for our seats in left field. My aunt and uncle paid $50 each for their tickets; they sat five rows behind the first base dugout. This is an example of price discrimination since we paid different prices for the same product, and the differences were not due to differences in costs." How would Arnold's economics instructor assess Arnold's example
Answer:
Arnold made a mistake since the $25 seats are not the same product as the $50 seats. It is not the same to be sitting behind the first base dugout or sitting at the end of left field.
Sometimes you can get better seats for the same price as not so good seats, like in a movie theater, but a baseball field is much bigger and the quality of the show (baseball game) varies a lot depending where you are sitting.
Arnold's economics teacher would point out that his example doesn't demonstrate price discrimination but price differentiation, as the different ticket prices are justified by the different seating locations.
Explanation:Arnold Marion's economics instructor would likely explain that Arnold's example is not an instance of price discrimination but rather, price differentiation based on product characteristics. Price discrimination in economics takes place when a seller charges different prices to different buyers for the same good or service, with no cost-based justification for the price differences. However, in Arnold's example, there is indeed a significant difference in the product - the location of the seats. This results in different experiences for the buyers (Arnold and his family) and hence, justifies the different prices. The price difference is not arbitrary; it's a result of perceived value difference by the consumers.
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You are working with your project team to schedule activities for your construction project. You have the carpet installation activity may begin. The relationship between the painting activity and carpet instalionacvity can atwity lo be can best be described as_____________.a. Lag.b. Lead.c. Finish-to-start.d. Start-to-finish
Answer:
c.
Explanation:
Based on the information provided with regards to the situation at hand it can be said that the relationship between these two is a Finish-To-Start relationship. This refers to having to finish something in order to be able to start the next part. Which is exactly the case in this scenario, since the painting activity must be finished first and only then can the carpet installation activity can begin.
The Accounts Receivable balance is $20,000 and the Allowance for Bad Debts has a credit balance of $4,000 at the end of the year. What is the net realizable value of Accounts Receivable at the end of the year?
Answer:
$16,000
Explanation:
The account receivable is an asset. It is the account that shows how much you expect to receive from your customers as a result of selling to them on credit.
Due to the accrual accounting principle, as long as risks and rewards have been exchanged, business entities are to record the transaction whether cash has been received from those transactions or not.
An allowance for bad debt is a contra account to the account receivable.
A contra account is an account that causes a reduction in the value of an original account. In this case, the allowance for bad debt causes a reduction in the account receivable account.
What this means is that we are expecting some of the customers who we are expecting to receive from not to pay us. Meaning the amount we are expecting as receivables will reduce.
To reduce an asset account/ to reduce a debit balance, we would credit the corresponding account.
Thus in this case the question is saying that out of the $20,000 we are expecting to receive from customers, we are creating an allowance for $4,000 that might not be received from the customers, either due to previous experience or personal judgement.
Therefore, our receivables balance at the end of the year = $20,000 - $4,000 = $16,000.
I hope this helps you understand the question better and you can solve similar questions .
Answer:
$16,000
Explanation:
You will always subtract the Allowance for bad debts from the account receivables to get the net realizable value
If a firm's current revenues are less than its current variable costs, it should shut down
a. if marginal cost rises above marginal revenue.
b. immediately.
c. if price falls below its current fixed costs.
d. if expected revenues are less than expected costs.
Answer:
b. immediately.
Explanation:
because losses would be higher if they continue, it should shut down immediately.
Sleek Designs Inc. is producing its first eReader. The company is striving to overcome some of the issues communicated by customers about competitive products including screen glare and product bulkiness. Sleek Designs Inc. is using a ________ approach in their new product development process.
A) customer-centeredB) team-basedC) sequentialD) supply/demandE) systematic
Answer:
The correct answer is A) customer-centered.
Explanation:
A new way of doing business makes its way. Those who have chosen it work hard to place customers at the genuine center of the entire business. Customer centrality is a holistic approach to offer products and services to customers looking for a first-class experience before, during and after their purchase. A customer-centered business triumphs by providing better experiences than its direct competitors.
There are certain important aspects that companies that practice customer centrality dominate:
They know their customers. They design experiences focused on their customers. They evaluate and follow metrics focused on their customers. They empower the team to provide a customer-centric experience.The main function of –________banks is to accept deposits and then to lend the same money (minus –)___________ back out. Banks make a profit by charging a higher interest rate on – than the interest rate they pay on ___________. Through the loan process, banks are actually able to _______ money.
Commercial banks accept deposits and make loans, earning a profit from the interest rate difference. Through their lending activities, banks have the ability to create money, and the money multiplier effect describes how banks can generate money in the economy based on the reserves they hold.
Explanation:The main function of commercial banks is to accept deposits and then to lend the same money (minus reserves) back out. Banks make a profit by charging a higher interest rate on loans than the interest rate they pay on deposits. Through the loan process, banks are actually able to create money.
Banks obtain funds to lend by attracting depositors, borrowing from larger banks or the central bank, and making investments. A bank's ability to lend money is limited by the amount it must keep in its vault as reserves. Banks run the risk of negative net worth if the value of their assets declines, which can happen due to defaults on loans or rising interest rates leading to an asset-liability time mismatch.
The concept of money creation in banking refers to the process where banks lend out funds deposited with them, which then are re-deposited and lent out again, creating a multiplier effect in the economy. The money multiplier is a formula that quantifies how much money a banking system can create from each unit of bank reserves.