Direct Serving Loans Method Requires a System of Good Internal

question 204

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. In such a case the Accounting Department is responsible for all of the following EXCEPT:

• A) Supplying the Investment Department with correct data and reports that summarize all loan transactions
• B) Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs
• C) The design, maintenance, and accuracy of accounting records, for periodic management and exception reports, and for statutory statement preparation
• D) Its records may or may not provide the needed data to support this reporting function

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Definitions:

Negative Externalities

Costs suffered by a third party due to an economic transaction they were not involved in.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service, considering both private and external benefits.

Marginal Social Cost

The additional cost to society as a whole for producing one more unit of a good or service.