Use the Following Information for Questions -What Is the Earnings Base at 1^st State?
A) 12

question 81

Multiple Choice

Use the following information for questions .
1 st State Bank Balance Sheet Assets
$\begin{array}{lrr}\text { Cash and Due from Banks } & \$ & 50 \\\text { Investments } & \$ & 300 \\\text { Federal Funds } & \$ & 10 \\\text { Loans } & \$ & 350 \\\text { Premises } & \$ & 90\\\text { Average Total Assets }&\$&800\\\\\text { Liabilities \& Equity }\\\text { Demand Deposits } & \$ & 100 \\\text { Time Deposits } & \$ & 300 \\\text { Federal Funds } & \$ & 300 \\\text { Equity } & \$ & 100\\\text { Average Total Liabilities \& Equity }&\$&800\\\\\text { Income Statement }\\\text { Interest Income } & \$ & 100 \\\text { Interest Expense } & \$ & 75 \\\text { Non-Interest Income } & \$ & 5 \\\text { Non-Interest Expense } & \$ & 25\\\text { Net Income }&\$&5\end{array}$
-What is the earnings base at 1^st State?

• A) 12.5%
• B) 17.5%
• C) 58.5%
• D) 75.5%
• E) 82.5%

---

Definitions:

Income Taxes

Taxes charged on the income of individuals or entities (corporations), based on the income or profit earned within a tax period.

Operating Activity

Activities that relate directly to the primary business operations of a company, such as sales and service revenues and associated costs.

Financing Activities

Activities that result in changes in the size and composition of the equity capital and borrowings of the entity.

IFRS

International Financial Reporting Standards are a set of accounting standards developed by the International Accounting Standards Board (IASB) to guide companies and organizations in preparing financial statements globally.