Direct Serving Loans Method Requires a System of Good Internal

question 91

Multiple Choice

Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. The Investment Department is responsible for promptly supplying the Accounting Department with:

• A) Accounting data on new loans
• B) Resolving few exceptions reported to it by the Accounting Department, i.e., when a borrower defaults on a loan payment
• C) Data related to changes in existing loans, which affects the accounting function
• D) Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs

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Definitions:

Insurable Interest

A requirement that a person seeking to purchase insurance has a legitimate interest in safeguarding the item or life being insured from loss or damage.

Market Value

The amount for which something can be sold on a given market at a specific time.

Property

Legal rights to own, use, and dispose of land, buildings, goods, intellectual creations, and other items.

Punitive Damages

Financial payment provided to a harmed individual that exceeds the amount needed for loss recovery and aims to penalize the responsible party.