Accounting: 9-2 Business Banking

What is the primary role of banks in the economy?

• To print and distribute physical money

• To act as intermediaries between depositors and borrowers

• To set interest rates for the entire economy

• To provide security and surveillance services for businesses

What is Net Interest Margin?

• The total amount of money a bank has in its vaults

• The interest rate set by the Federal Reserve

• A government-imposed limit on how much interest a bank can earn

• The difference between the interest banks earn on loans and the interest they pay to depositors

What type of account typically allows for unlimited withdrawals and deposits?

• Money market account

• Savings account

• Certificate of Deposit (CD)

• Checking account

What is the purpose of FDIC insurance?

• To protect against theft of physical cash

• To protect depositors against the loss of their insured deposits if a bank fails

• To insure the physical buildings of banks

• To guarantee bank loans to businesses

What is a restrictive endorsement on a check?

• A signature that restricts the time period during which a check can be cashed

• A signature with specific instructions, such as 'For deposit only'

• A legal restriction placed by the government on large transactions

• An endorsement that limits the amount of money that can be withdrawn

What is the main reason businesses use checking accounts?

• For long-term investment purposes

• To earn high interest on stored funds

• To avoid paying taxes on income

• For security, convenience, and liquidity of funds

How can businesses deposit money into their bank accounts?

• Through Electronic Funds Transfer (EFT)

• By borrowing from another bank

• By purchasing stocks

• Investing in real estate

What is the main limitation of a savings account compared to a checking account?

• It cannot be used to deposit money

• It has a limit on the number of cash withdrawals per month

• It can only be used by individuals, not businesses

• It does not allow electronic transfers

What is the purpose of endorsing a check?

• To extend the validity period of the check

• To increase the value of the check

• To convert the check into a different currency

• To authorize the legal transfer of funds between parties

What is an Electronic Funds Transfer (EFT) used for?

• Printing physical currency

• Creating new bank accounts

• Transferring money electronically

• Manual counting of cash