The Stability of the Financial System Is Enhanced by the Ability

question 65

Multiple Choice

The stability of the financial system is enhanced by the ability of central banks to:

• A) be a lender of last resort.
• B) provide loans to insolvent banks.
• C) provide deposit insurance.
• D) convert poorly run banks into branches of the central bank.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of accounts receivable that is expected to be uncollectible.

Debit Balance

An excess of debits over credits in a ledger account, typically indicating an increase in assets or expenses.

Posting Error

A mistake made during the process of entering or recording financial transactions in the accounting records.

Written Off

The accounting action of declaring that an asset is no longer useful and its value has become zero, often leading to its removal from the balance sheet.