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Deposit account - Quiz
Contributed by: Morris
  • 1. What is the nature of the relationship between a bank and a depositor?
A) Partnership
B) Shareholder-corporation
C) Employer-employee
D) Debtor-creditor
  • 2. How is a customer's deposit recorded on a bank's balance sheet?
A) As equity
B) As revenue
C) As a liability
D) As an asset
  • 3. What happens to the legal title of cash when a customer deposits it into an account?
A) The customer surrenders it to the bank
B) It remains with the central bank
C) The customer retains it
D) It is held by a third-party trustee
  • 4. What is the process called where banks lend out most of the money deposited by customers?
A) Direct lending
B) Fractional-reserve banking
C) Full-reserve banking
D) Central banking
  • 5. What is the primary way banks avoid using physical cash for payments?
A) Selling bank assets
B) Printing more currency
C) Increasing interest rates
D) Transferring ownership of deposits
  • 6. Which of the following is considered an asset of a bank?
A) The interest owed to customers
B) The cash received from a deposit
C) The deposit liability
D) Customer withdrawal rights
  • 7. What does the term 'withdraw' mean in the context of banking?
A) Paying money into an account
B) Taking money out of an account
C) Transferring funds between banks
D) Borrowing funds from a lender
  • 8. What do commercial banks create when they issue a loan by depositing proceeds into a checking account?
A) Economic money
B) Central bank reserves
C) Legal tender
D) Physical banknotes
  • 9. What determines the methods a customer uses to move money into or out of an account?
A) The central bank's policy
B) The terms and conditions of the account
C) The bank's physical location
D) The type of currency used
  • 10. On the bank's books, when $100 is deposited, what is debited?
A) The deposits liability account
B) The equity account
C) The cash account
D) The interest expense account
  • 11. Which types of accounts are specifically mentioned as examples of deposit accounts?
A) Investment and brokerage accounts
B) Credit and loan accounts
C) Savings and current accounts
D) Tax and retirement accounts
  • 12. What does the account balance represent from the bank's perspective?
A) The physical cash stored in the vault
B) The total profit earned by the bank
C) An amount owed by the bank to the customer
D) An amount owed by the customer to the bank
  • 13. What allows banks to pay interest on deposits?
A) Printing new banknotes
B) Earning interest on assets from lending
C) Charging customers for every transaction
D) Investing in the stock market
  • 14. In financial statements, the noun 'deposit' describes what?
A) The physical funds held by the bank
B) The liability owed by the bank
C) The profit made on loans
D) The operational cost of the bank
  • 15. How do banks effectively increase the money supply?
A) By restricting withdrawals
B) By reducing the interest paid on savings
C) By recording loans as deposit liabilities
D) By physically printing more currency
  • 16. Besides deposit insurance, what else may protect bank deposits?
A) Customer loyalty programs
B) Government guarantee scheme
C) Internal bank audits
D) Corporate tax breaks
  • 17. Which of the following is an example of a statutory regulation mentioned in the text?
A) Customer service standards
B) Office hour regulations
C) Marketing guidelines
D) Reserve requirements
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