Lindo, Hannah Bea C.

BS Accountancy 4-4

The duty of choosing borrowers of high caliber and ensuring that they follow loan
conditions is generally assigned to banks. Compared to all other industries, specialized
banks place a far higher percentage of their assets in a preferred industry. In contrast to
businesses that are product or service-based, banks primarily deal with money. As a
result, the financial reporting of banks' operations differs significantly from what one
might anticipate from a regular business. Individual cash flows are often divided into
three categories when creating a statement of cash flows: operating, investing, and
financing. For banks, this basically does not apply. The primary sources of revenue and
cash flow for the bank are entirely distinct from those of other businesses, which
explains why. As a result, although you typically see interest payments in the finance
section and security purchases in the investing section, banks report all of these
transactions in the operational section. We may proceed in the same manner with the
additional elements as well, such as trading activity profits, etc.