BANKS OF QUESTIONS

UNIT 6 MONEY AND BANKING

Questions Answers
1. What is a deposit? A deposit is a sum of money which is in a bank account
or savings account, especially a sum which will be left
there for some time.
2. What is a demand deposit? A demand deposit is a bank deposit from which
withdrawals may be made without notice.
3. What is a time deposit? Time deposit is an interest-bearing bank deposit that has
a specified date of maturity, can only be withdrawn with
notice in advance.
4. What is a NOW account? A NOW account, known as negotiable order of
withdrawal account, is an interest-earning bank account
whereby the owner may write drafts against the money
held on deposit.
5. What is a share draft account? A share-draft account is a version of a checking account,
except it is offered by a credit union instead of a bank.
6. What does the central bank do specifically when it As banker to the government,
functions as the government’s banker? + the central bank collects and disburses government
income,
+ manages the issues and redemption of government
debts,
+ advises the government on all matters pertaining to
financial activities,
+ makes loans to the government.
7. What does the central bank do specifically when it functions the - To hold and transfer bank’s deposits

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banker of the banking system?
8. What are functions of commercial banks?
9. What are functions of insurance companies?
10. What does a nation’s money supply include?
11. How can commercial banks make/ earn profits?
12. How can an insurance company act as a financial
intermediary?
- To provide technical and advisory services
- To act as a lender of last resort
- To supervise their operations.
- To maintain and create demand deposits by loans
and investments influences the supply of money in a
nation’s economy.
- To create money in circulation in savings banks
and share draft in credit unions
The purpose of insurance companies is to allow people to
pool their resources in order to minimize/ prevent the risk
associated with accident, sickness, death, and other
unpredictable circumstances.
It is the entire stock of currency and other liquid
instruments circulating in a country's economy as of a
particular time.
- To make a profit from the difference between the
interest rates on deposits and those they charge for loans
- To make profits from the fees and commissions
they charge for their services
Insurance company can control huge of money, which is
collected from customers, then, most of which is placed
in long term investments. A large portion is put into
bonds and morgages, although significant investments are
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MONEY & ITS FUNCTIONS
13. What is a medium of exchange?
14. How is money used as a means of payment?
15. What is a measure of value?/ a unit of account?
16. For what purposes is money used as a measure of value?
17. What is a store of value?
18. Does money function as a perfect store of value? Why?
19. What is a standard of deferred payments?
made in real estates and stocks.
Medium of exchange is anything which is widely
accepted in payments of goods and services, and in
settlement of debts
People use money as a means of payments by using it in
payment of goods and services, and in settlement of debts
Measure of value is one of the functions of money,
money can be used to measure value in its unit of
account.
The unit of account is a unit in which all prices are
quoted and accounts are kept
We used money as a measure of value because we need
measurements for the value of things offered at the
market.
Store of value is a function of money, it refers that money
can be saved to make purchase in the future. But money
is not a perfect store of value because inflation may
happen
money is not a perfect store of value because inflation
may happen
It is one of functions of money, it refers that when you
buy/ purchase something on account, your payment is
expressed in term of money in order to be paid in the
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20. For what purposes is money used as a standard of deferred When pp purchase things on account, i.e. purchase but
payments?
121. What is a barter economy?
22. What is token money?
23. What is commodity money?
Questions
TYPES OF TAXES
24.What is the definition of taxation?
25.What is corporate income tax?
26.What is personal income tax
27.What is customs duty?
future
not pay immidiately, your payment is expressed in term
of money in order to be paid in the future
Barter economy is a cashless economy system, in which
goods and services are traded at negotiated rates
Token money is a means of payment whose value or
purchasing power as money greatly exceeds its cost of
production.
Commodity money is a useful commodity that serves as a
medium of exchange. The value of commodity is about
equal to the value of material contained in it.
UNIT 7 TAXATION
Answers
Taxation is the act of imposing tax on individuals or organizations by the
government to finance government programs.
A tax is imposed on the profit of a business
The tax is imposed on wages and salaries (and business profits in the US)
The tax which is imposed on imported and exported goods
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28.What is excise tax?
29.What is capital transfer tax?
30. What is capital gain tax?
31. What is VAT tax?
32. What are progressive taxes?
33. What are regressive taxes?
34. What are direct taxes?
35. What are indirect taxes?
36. What is the primary function of taxation?
37. What is the function of corporate income
tax?
38. What is the function of income tax in
general?
39. What is the function of excise tax?
Excise tax is tax which is imposed on some specific goods, such as alcohol,
luxury goods, cars,.. in order to discourage ppl from consumption of these
goods
A tax levied on gifts and inheritances over a certain value
A tax is imposed on any capital gains or profits made by people or businesses
from the sale of certain assets including stocks, bonds, or real estate
A tax collected at each stage of production, excluding the already-taxed costs
from previous stages
A tax that is levied at a higher rate on higher income, such as investment
income taxes, tax on interest earned, and so on
Regressive tax is the tax that takes lower percentage on higher income and
higher percentage on lower income.
Direct tax is the tax paid directly to the government by the tax payer. Tax
payer and tax bearer is one person
Indirect tax is the tax paid indirectly to the government by the tax payer. Tax
payer and tax bearer is not one person
To raise revenue to finance gov expenditure
To encourage capital investment.
To redistribute society income or wealth.
To restrict the consumption of some certain goods that are not good for health
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40. What is one of the functions of customs
duty?
41. What is one of the functions of payroll
taxes?
TAX AVOIDANCE & TAX EVASION
42. What is tax avoidance?
43. What are perks?
44. What are loopholes in the tax laws?
45. What are tax shelters?
46. What are tax deductibles?
47. How can a company avoid taxes on
profits?
48. What are tax havens?
or environment.
To protect domestic industries or domestic goods
Payroll tax is used to ensure social security and medicare.
Reducing the amount of tax to a legal minimum
Perks are non-financial benefits or advantages of a job such as company cars,
free health insurance, lunch subsidies instead of taxable income
- a way to avoid tax on salaries.
- loopholes in the tax laws refers that employers give highly-paid
employees perks or benefits (company cars, free health insurance, subsidized
lunches) instead of taxable income.
- A legal way to avoid tax on salaries.
- Is the way to postpone the payment of tax by life insurance policies,
pension plans, and other investments
- A legal way to avoid tax on salaries
- Tax deductible means subtracting the taxable income from the income
such as donating to charities
- Making a tax loss.
- Tax havens
Tax havens are countries where taxes are low. Multinational companies often
set up their head of offices in these countries in order to reduce amount of tax
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 to legal minimum
49. How can a multinational corporation Multinational companies often set up their head of offices in low-taxes
avoid paying taxes? countries in order to reduce amount of tax to legal minimum, which is known
as tax havens
50. What is money laundering? Laundering money means passing money through series of companies in very
complicated transactions to disguise the origin from tax inspectors.
51. How does a criminal organization disguise Criminal organization tends to pass money through a series of companies in
the origin of their money from tax inspectors? very complicated transactions in order to disguise its origin from tax
inspectors and police.
52. What is tax evasion? Making false or no declarations to tax authorities.

UNIT 8 ACCOUNTING & FINANCIAL STATEMENTS

Questions Answers
ACCOUNTING BOOKS
52. What is the definition of accounting? .Accounting is the process of identifying, measuring, recording, classifying,
summarizing, analyzing, interpreting and communicating the financial
transactions of a company.
53. What is a journal or a book of original? Journal or book of original is a book recording all of the transactions of a
business
54. For what purposes are the journals kept? They are kept for memorandum purpose.
55. What are ledgers? Ledgers are books a book containing all the accounts of the company. An
account includes similar transactions.
56. What is an account? The account of a business is a financial record containing information of
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57. What are common financial statements?
ACCOUNTING PROCESS
58. What do accountants have to do daily?
59. What do accountants have to do regularly
(monthly or quarterly)?
60. What do accountants have to do at the end
of the fiscal year?
FINANCIAL STATEMENTS
61. What is the basic accounting equation?
62. What information does a balance sheet
provide?
63. What do assets of a company include?
64. What do liabilities of a company include?
65. What information does an income
statement provide?
groups of similar transactions.
- Income statement
- The balance sheet
- The funds flow statement
Accountants have to record all of daily transactions related to a business in a
journal.
Monthly or Quarterly, accountants have to transfers figures from the journals
to ledgers, and this activity is called posting.
At the end of fiscal year, accountants use the information in the accounts to
construct financial statements.
Assets equal liabilities plus owner’s equity
- The financial situation of a company on a particular date (often is the
last day of its financial year)
- Lists the company’s assets, liabilities, shareholder’s funds
Assets of a company include debtors or accounts receivable that are assumed
to be paid such as land, building, inventory, accounts receivables, …
Liabilities include creditors or accounts payable that they will have to be paid
such as salary, rent, interest…
- revenue and expenditure.
- give figures for total sales or turnover.
- for costs or overhead.
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66. What information does a cash flow
statement provide?
ACCOUNTING INFORMATION
67. What are main types of accounting
information?
68. What is the definition of financial
accounting information?
69. For what purposes do potential investors
need financial accounting information of the
company?
70. For what purposes do creditors need
financial accounting information of the
company?
71. Why is financial accounting considered as
“general purpose” accounting information?
72. For what purposes do managers of the
company use accounting information?
- Shows the flow of cash in and out of a company between balance sheet dates
+ Cash flow in/ Sources of funds consist of borrowing, trading profits,
depreciation provisions, sale of assets, issuing the shares
+ Cash flow out/ Application of funds consist of the purchases of fixed or
financial assets, the payment of dividends, the repayment of loans, trading
losses.
- Financial accounting information
- Tax accounting information
- Management accounting information
- It refers to information describing the financial resoures, obligations,
and activities of an economic entity (either an organization or an individual)
Potential investors need financial accounting information of the company in
order to decide where to place their scarce investment resources.
Creditors need financial accounting information of the company in order to
decide where to place their scarce financial resources.
Because it is used by different groups of users for different purposes.
Managers use accounting information to know the financial performance of
the business, set overall goals, decide whether to introduce a new line of
products or not
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Questions
73. What is the “selling concept”?
74. What is the “marketing concept”?
75. What are market opportunities?
76. What does “market segmentation” mean?
77. What is “market research”?
78. What are 4Ps of the marketing mix?
79. What do “marketing products” include?
UNIT 9 MARKETING
Answers
- Persuade consumers buy non-essential goods or services by using
hard-selling technique
- (In other words) products are sold rather than bought
- (Producers) find wants and fill wants, they also anticipate and create
new ones (to satisfy consumers’ needs and demands)
- Make what will be bought (instead of selling what you make)
Possibilities of filling unsatisfied needs in a sector in which a company can
profitably produce goods or services.
Dividing a market into a distinct group of buyers who have different
requirements or buying habits.
Collecting, analyzing and reporting data relevant to a specific marketing
situation (such as a proposed new product)
Product
Place
Promotion
Price
Quality, features (standard and optional) , style, brand name , size, packaging,
services and guarantee
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80. What does “marketing promotion” Advertising, sales promotion, personal sale, publicity
include?
81. What does “marketing price” include? Basic list price, discount, length of payment period, possible credit term
82. What does “marketing place” include? Distribution channel, location of points of sales, inventory size, transport,..
UNIT 10

Questions Answers
Advantages & Disadvantages
83.What is the definition of international International business consists of all commercial activities to promote the
business? transfer of goods, services, resources, and technologies across national
boundaries.
84.What are some advantages of world - Wealth accrues to exporting nations thereby develop their
trade for nations which export goods? economies
- Increase production of goods
- Provide business opportunities
85. What are some advantages of world - Lower prices of goods and services.
trade for nations which import goods? - Provide better products for consumers
- Improve production efficiency for domestic producers
86. What are some special programs of the - Special programs that provides marketing information, establish trade
government to encourage exports? missions, subsidize exports and provides tax benefits or incentives.
87. What are some disadvantages of world - Cause the dependence of importing countries on exporting countries
trade for nations which import goods? - Affect the development of some specific industries
- Importing from abroad may harm the domestic industries
88. What is dumping? - The selling of goods abroad at below cost price in order to destroy or

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 weaken competitors or to earn foreign currency to pay for necessary imports.
THEORIES
89. What is the main content of the - Adam Smith said that in a free market, countries produce whatever
absolute advantage? they can most efficiently grow or manufacture or what is of the greatest
advantage to them.
90. What is the main content of the - David Ricardo said that an exporting country does not have to be the most
comparative advantage? efficient producer of the product; It only has to be more efficient than the
country which imports the product.
TRADE BARRIERS
91. What are 4 common trade barriers? - Tariff
- quotas
- embargoes
- Subsidies
92. What is tariff? A type of tax which is imposed on imported goods to increase the
government’s revenue, protect domestic companies against foreign
competition.
93. What is ad valorem tariff? Ad valorem tariff is a type of tax which is based on the value of imports
94. What is specific tariff? Specific tariff is a certain amount of tax for each unit of imported product
95. What is the purpose of imposing - To restrict imports and raise revenue for the government.
tariffs on imports? - A tariff is added to the price of the imported goods. This leads to fewer
imports purchased, and then more domestic production is sold.
96. What is “quota”? Quantitative limit set by the government on the number of goods and services
imported from other countries or exported to other countries.
97. What is the purpose of imposing - The purpose of imposing quotas on imports is to restrict the number or
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 quotas on imports?
98. What is government subsidy?
99. Why do governments subsidize
exports?
100. What is balance of trade?
101. What is trade balance deficit?
102. What is trade balance surplus?
103. What is balance of payments
quantity of imports and promote exports.
A government subsidy is a grant paid by a government to an industry or an
enterprise to benefit the public or to keep prices low.
- Wealth often accrues to exporting countries.
- Help increase income
- To raise standard of living
The difference between the value of a country's exports and the value of a
country's imports for a given period.
A negative balance of trade or payments
A positive balance of trade or payments
Balance of payment (BOP) is a statement of all transactions made between
entities in one country and the rest of the world over a defined period
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