When a Bank Suspects That a $1 Million Loan Might

question 89

Multiple Choice

When a bank suspects that a $1 million loan might prove to be bad debt that will have to be written off in the future the bank

• A)can set aside $1 million of its earnings in its loan loss reserves account.
• B)reduces its reported earnings by $1,even though it has not yet actually lost the $1 million.
• C)reduces its assets immediately by $1 million,even though it has not yet lost the $1 million.
• D)reduces its reserves by $1 million,so that they can use those funds later.

---

Definitions:

Ethical Constraints

Moral principles and considerations that limit or guide actions and decisions in various contexts, including professions.

Constraints

Limitations or restrictions that affect the process of project planning, execution, or the final outcome.

Broad Goals

Wide-ranging or comprehensive objectives that provide overall direction for a project, personal development, or organization.

Security

Measures or protocols implemented to protect information, people, or assets from theft, damage, or unauthorized access.