Which of the Following Statements Is True

question 44

Multiple Choice

Which of the following statements is true?

• A)Large increases in the value of the OBS assets can render an FI economically insolvent.
• B)Large increases in the value of the OBS liabilities will not render an FI economically insolvent as the liabilities are only contingent.
• C)Large increases in the value of the OBS liabilities will not render an FI economically insolvent as the net worth of the institution will not be affected.
• D)Large increases in the value of the OBS liabilities can render an FI economically insolvent.

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Definitions:

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.

Closing

The process of finalizing accounts at the end of an accounting period, transferring temporary account balances to permanent ones.

Zeros Out

The process of adjusting an account balance to zero, often used in the context of budgeting or closing temporary accounts at the end of an accounting period.

Balance Columns

Columns in an account or ledger used to record the debit and credit balances.