After graduation, you work for a few years at a major accounting firm and advance to...

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After graduation, you work for a few years at a major accounting firm and advance to...

After graduation, you work for a few years at a major accounting firm and advance to Senior.

However, as part of this role, you start working on a client that is different from your other

background: specifically, a major bank located in San Francisco. This bank primarily takes

deposits from retail and business customers and lends money out to others. The accounting seems

to be completely different from what you are used to and so you go to the Codification to find out

what the accounting standards for this industry consist of. Describe the major classes of

transactions undertaken by this sort of entity and how they should be accounted for.

business accounting

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Answer 1

Answer #1

Major classes of transactions :

Being a bank, it would have following major transaction

1. Interest income

2. Loans given to Customer/Government/Company

3. Deposits taken from Customer/Company

4. Transaction fees for transfer of amount from one bank to another bank account on account of customer

5. Processing fee taken from customer for loan processed

Accounting of major classes of transaction

1. Interest received from loan given to Customer/Company/Government is recorded as income of the bank

2. Interest paid on deposit taken from Customer/Company is recorded as expenses of the bank

3. Loan given is shown under Asset in Balance Sheet

4. Deposit taken is shown under liability in Balance Sheet

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Answer 2

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After graduation, you work for a few years at a major accounting firm and advance to...

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