Bank of the Pacific Is a Local Bank Operating Primarily

question 23

Multiple Choice

Bank of the Pacific is a local bank operating primarily in Portland,Oregon.The bank accepts deposits from and makes loans to local businesses and individuals.Which of the following accounting estimates would be most important for Bank of the Pacific?

• A)Uncollectible accounts receivable.
• B)Warranty claims.
• C)Total units of production.
• D)Sales returns.

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Definitions:

Premium On Bonds Payable

The amount by which the bond's selling price exceeds its face value, reflecting additional cost to the issuer but higher interest income for the investor.

Balance Sheet

A financial overview capturing a company’s holdings, liabilities, and the proportion of equity owned by shareholders, pegged at a specific date.

Deduction

An amount that is subtracted from gross income or total expenses, used to reduce taxable income or the amount owed.

Effective Interest Rate Method

The method of amortizing discounts and premiums that provides for a constant rate of interest on the carrying amount of the bonds at the beginning of each period; often called simply the “interest method.”