The Following Questions Apply to the Following Simplified Bank Balance

question 21

Multiple Choice

The following questions apply to the following simplified bank balance sheet

-The Bank above suffers a 50% fall in the value of its loans.It is now

• A) in a position where none of its creditors will get any of their money back
• B) effectively bankrupt and depositors stand to lose money
• C) effectively bankrupt but depositors can be paid off
• D) effectively bankrupt but depositors and subordinated debt holders can be paid off
• E) still a viable enterprise but with dramatically reduced capital

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the efficiency of a company in managing its labor and supplies in the production process.

Sales

Revenue generated from goods or services sold by a company during a specific period.

Purchase Returns

Goods returned by the buyer to the supplier usually due to defects or quality issues, sometimes leading to a refund or credit.

Sales Salary Expense

The total amount of salary and wages paid to employees involved in the sales process, reflected as an expense on the income statement.