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Questions and Answers
Which type of bank is responsible for regulating currency supply and supervising banking activities?
Which type of bank is responsible for regulating currency supply and supervising banking activities?
- Industrial Development Bank
- Central Bank (correct)
- Specialized Bank
- Commercial Bank
A customer deposits money into a current account at a commercial bank. How does this transaction affect the bank's accounting equation?
A customer deposits money into a current account at a commercial bank. How does this transaction affect the bank's accounting equation?
- Increases assets and decreases liabilities
- Decreases liabilities.
- Decreases assets and increases liabilities
- Increases liabilities (correct)
From the bank's perspective, what is the characteristics of a credit current account?
From the bank's perspective, what is the characteristics of a credit current account?
- Asset with a Credit Nature
- Liability with a Debit Nature
- Liability with a Credit Nature (correct)
- Asset with a Debit Nature
A customer borrows money from the bank through a debit current account. How does the bank classify this account?
A customer borrows money from the bank through a debit current account. How does the bank classify this account?
How does adding interest expense to a customer's current account affect the accounting equation?
How does adding interest expense to a customer's current account affect the accounting equation?
In the context of banking, what is the primary role of the clearing department?
In the context of banking, what is the primary role of the clearing department?
Which of the following best describes the function of a letter of credit department in a commercial bank?
Which of the following best describes the function of a letter of credit department in a commercial bank?
Which of the following is considered a primary function of the credit department within a bank?
Which of the following is considered a primary function of the credit department within a bank?
A bank customer transfers funds from their current account to another customer's account at the same bank. What is the correct accounting entry for the bank?
A bank customer transfers funds from their current account to another customer's account at the same bank. What is the correct accounting entry for the bank?
What is the main difference between a credit current account and debit current account?
What is the main difference between a credit current account and debit current account?
Flashcards
Commercial Banks
Commercial Banks
Accepting deposits, granting loans, foreign currency transactions, and payment services.
Specialized Banks
Specialized Banks
Banks focused on specific sectors like industry or agriculture.
Central Bank
Central Bank
Regulates money supply, supervises banks, and acts as a clearing house.
Current Account Department
Current Account Department
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Credit Current Account
Credit Current Account
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Debit Current Account
Debit Current Account
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Activities in Current Account Department
Activities in Current Account Department
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Study Notes
- Banks can be categorized into commercial, specialized, and central banks.
- Specialized banks consist of industrial development and agricultural credit banks.
- A central bank regulates currency supply, supervises banking activities, and serves as a clearing house for other banks.
- Commercial banks accept and protect money for depositors.
- Commercial banks invest customer deposits and grant loans to borrowers.
- Commercial banks open letters of credit, issue letters of guarantee, and perform foreign currency transactions.
- Commercial banks collect and pay checks and bills of exchange for customers.
- Commercial banks render services related to securities.
- The course is divided into two parts: bank accounting and analysis of banking performance.
Bank Accounting
- Bank accounting consists of the current account department, time deposit department, clearing department, letter of credit department and credit department.
Bank performance analysis
- Performance analysis uses the CAMEL model.
Current Account Department
- The functions of this department offer services to customers by opening current accounts.
- Current accounts are used through which customers can deposit, withdraw, and transfer money at any time.
- Tasks and operations include: opening current accounts for customers.
- Tasks and operations include: Recording the depositing, withdrawing, and transferring transactions.
- Tasks and operations include: Calculating and recording interest expenses and interest revenues on current accounts.
Opening Current Accounts
- Credit current accounts have a credit nature from the bank's point of view.
- Credit current accounts are a liability for the bank because the bank is required to repay the customer's deposit.
- The bank pays interest expense on this account.
- In entries, it's named "Current Account."
- Demand deposits/checking accounts are considered liabilities for the bank.
Debit Current Account
- It is an asset for the bank because the customer borrows money from the bank and is required to repay.
- Debit current account has a debit nature from the bank's point of view.
- The bank receives interest revenue on this account.
- It is named "Debit Current Account."
- Overdrafts are considered assets for the bank, earning interest revenue.
Recording Transactions
- Remember the accounting equation: Assets = Liabilities + Owner's Equity
- Expenses, Assets, and Drawings have a Debit nature.
- Revenues, Capital and Liabilities have a Credit nature.
Activities in Current Account Departments
- Cash deposit increases the current account (credit).
- Cash withdrawal decreases the current account (debit).
- Transfer between current accounts increases the receiver's account (credit) and decreases the sender's account (debit).
- Adding interest expense to a current account increases the current account (credit).
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