Since Depositors,like Any Lender,only Receive Fixed Payments While the Bank

question 47

Multiple Choice

Since depositors,like any lender,only receive fixed payments while the bank keeps any surplus profits,they face the ________ problem that banks may take on too ________ risk.

• A)adverse selection;little
• B)adverse selection;much
• C)moral hazard;little
• D)moral hazard;much

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Definitions:

Sales Taxes Payable

The liability account used to record the sales tax collected from customers by a seller, which is due to be paid to the government.

Cash Sales

Transactions in which goods or services are paid for and received at the time of the sale, using cash or equivalent.

Sales Taxes

Taxes imposed by governments on the sale of goods and services.

Journal Entry

A record in accounting that notes transactions and changes in financial statements.