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%

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Definitions:

Right Of Return

A policy allowing customers to return purchased goods under certain conditions, often within a specific time frame.

Revenue Recognition

The accounting principle that dictates when a company should acknowledge income, typically when a product or service has been delivered or rendered.

Right Of Return

A policy that allows customers to return purchased goods under specified conditions.

Special Purpose Entity

A legal entity created for a specific objective, often to isolate financial risk or for securitization purposes.