In May 1991,the FDIC Announced That It Would Sell the Government's

question 64

Multiple Choice

In May 1991,the FDIC announced that it would sell the government's final 26% stake in Continental Illinois,ending government ownership of the bank that it had rescued in 1984. The FDIC took control of the bank,rather than liquidate it,because it believed that Continental Illinois

• A)was a good investment opportunity for the government.
• B)could be the Chicago branch of a new governmentally-owned interstate banking system.
• C)was too big to fail.
• D)would become the center of the new midwest region central bank system.

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Definitions:

Prospectively

Prospectively means looking forward or considering future events, often used in accounting in terms of adopting new policies for future transactions.

LIFO Reserve

The difference between the cost of inventory calculated under the Last In, First Out (LIFO) method and another inventory costing method like First In, First Out (FIFO).

Deferred Taxes

Taxes that are owed but not yet paid, arising from temporary differences between accounting and tax treatments of income and expenses.

Retrospective Adjustment

A change applied to the accounting records of prior periods to correct an error or implement a change in accounting principle.