A Primary Purpose of Maintaining the Safety and Soundness of Banks

question 9

Multiple Choice

A primary purpose of maintaining the safety and soundness of banks is to:

• A) encourage loan growth.
• B) protect depositors.
• C) ensure liquidity for the stock market.
• D) prevent discrimination.
• E) minimize bank losses.

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Definitions:

Normal Balance

The usual debit or credit balance that an account type is expected to have, which helps in ensuring the correct recording of transactions.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.

Dividends Declared

Profits distributed by a company to its shareholders, usually determined by the board of directors, and not yet paid out.

Normal Balance

The side (debit or credit) of an account that is typically increased; for assets and expenses, it's a debit; for liabilities, equity, and revenue, it's a credit.