The Financial Institutions Play an Important Role in Transferring the Savings

question 40

Multiple Choice

The financial institutions play an important role in transferring the savings of the individuals to the investments by businesses.Which of the following correctly states this transfer?

• A)banks collect the savings and invest it in the stock market.
• B)banks collect the savings, rewarding the savings by interest and dividend payments and, lend the funds to businesses who in turn buy equipment, factories and capital goods.
• C)banks collect the savings and lend the funds to the government who in turn redistribute it through different kinds of subsidies.
• D)financial institutions do not have a major role in this process.

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Definitions:

Authoritative Accounting Guidance

Officially recognized principles and standards that govern financial reporting and accounting practices.

ASC

Accounting Standards Codification, the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities in the United States.

FASB

The Financial Accounting Standards Board, an organization responsible for establishing financial accounting and reporting standards in the United States.

Chronological Order

Organizing events in the order that they occurred in time.