1. A balance sheet indicates insolvency when A. Its capital exceeds its liabilities B. Its assets...
1. A balance sheet indicates insolvency when
A. Its capital exceeds its liabilities
B. Its assets exceeds its liabilities
C. Its liabilities exceeds its assets
D. Its capital is less than its liabilities
2. Which of the following is an asset on a bank’s balance sheet?
A. Capital
B. Checkable deposits
C. Loans
D. None of the previous
3. The share of checkable deposits as a percentage of a bank’s liabilities has?
A. Expanded moderately over time
B. Expanded dramatically over time
C. Remain unchanged over time
D. Shrunk over time
4. When anyone like myself withdraws $100 from a bank the bank’s assets_____and its liabilities____
A. Increase; increase
B. Increase; decrease
C. Decrease; increase
D. Decrease; decrease
5. If a bank has a ROE( return on equity) of 10% and its ROA( Return on assets) is 1% then its equity multiplier is
A. 1/10
B. 100
C. 10
D.1
Homework Answers
1. Ans: Its liabilities exceeds its assets .
Explanation:
Insolvency in balance sheet occurs when a company's liabilities exceed its assets
2. Ans: Loans
Explanation:
In a bank's balance sheet Loans are an asset, where as capital and checkable deposits are a liabilities.
3. Ans: Shrunk over time
4. Ans: Increase; decrease
5. Ans: 10
Explanation:
Equity multiplier = ROE / ROA
= 10% / 1%
= 10
Add Answer to:
1. A balance sheet indicates insolvency when
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