When Discussing Financial Institutions,what Is a Shrinking Capital Base

question 29

Multiple Choice

When discussing financial institutions,what is a shrinking capital base?

• A)When an institution's credit rating is downgraded
• B)When the institution gives out a lot of large loans
• C)When the institution experiences a large influx of new equity
• D)When the amount of debt in relation to equity increases
• E)When the institution loses a large quantity of its customers in a short amount of time

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Definitions:

Debit Amount

A financial entry that increases an asset or expense account, or decreases a liability, equity, or revenue account.

Credit

A financial term that refers to the provision of resources (such as funds) by one party to another, where the second party does not repay the first party immediately but incurs a debt and is usually obliged to pay interest.

Accounting Cycle

The process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on the financial statements.

Accounting Period

A specified duration of time used for financial reporting and analysis purposes, such as a fiscal quarter or year, over which financial results are calculated and reported.