When a Bank Makes a Loan to One of Its

question 80

Multiple Choice

When a bank makes a loan to one of its customers,to the bank the loan is classified as

• A) an asset.
• B) a liability.
• C) neither an asset nor a liability.
• D) an asset in some cases and a liability in other cases,depending on the type of loan.

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Definitions:

Inventory Shipped on Consignment

Goods sent by a vendor (consignor) to a consignee, which are held by the consignee until sold; the consignor retains ownership until the goods are sold.

Consignee

The individual or entity that is legally permitted to receive goods but does not have ownership rights over the cargo until the consignment is paid for or sold.

LIFO Cost Flow Assumption

A method in accounting that assumes the last items of inventory purchased are the first ones sold.

Inventory Account

An account in financial accounting that tracks the value of a company's goods intended for sale, including raw materials, work-in-progress, and finished goods.