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FACALTY OF BUSINESS AND ECONOMICS

PROGRAM OF ACCOUNTING AND FINANCE

INDIVIDUAL STANDARD ASSIGNMENT FOR

COURSE NAME: BANKING PRINCIPLE AND PRACTICE
COURSE CODE: ACFN 363

NOTICE
 BEFOR STARTING CHECK WHEATHER THE ASSIGNMENT CONTAINS SIX
QUESTIONS
 TOTAL WEIGHT IS OUT OF 20 MARKES
 WRITE ANSWERS IN THE SPECES PROVIDED

AUGEST, 2019

Addis Ababa, Ethiopia

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Answer the following questions

1. What are the demerit of barter system in economic exchange?
2. List at least five commodities that was used as a medium of exchange in the early
period?
3. What are the defects of using commodity as money?
4. List and discus the qualities of money?
5. What are the primary function of commercial banks?
6. Choose one of the following and discus in details.
i. Function of central bank
ii. Difference between central bank and commercial banks
iii. Evolution of banking in Ethiopia
iv. Functions of money
v. King of coinage
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ANSWER KEY
1. As you know that barter system is a system of making exchange by using commodity.
Since it makes commodity as a center it has the following disadvantage: -
 Lack of double coincidence of wants: it is difficult to much wants of two
individuals at a time.
 Lack of common measurement of value: at the time of exchange two commodity
may have no equal value.
 Lack of divisibility of certain article
 Difficult to store wealth
2. In early period some commodity was used as a medium of exchange. Some of them are: -
 Sea-shore people used fish-hook and dried fish
 Siberia place community used skin and animal hair
 Tropical region community used ivory
 In Ethiopian also amole (salt) was used as means of exchange
3. Defect of using commodity as money are: -
 Lack of uniformity and standardization
 Difficult to store and prevent from loss
 Uncertain of supply
 Lack of portability
 Indivisibility
4. The qualities of money are: -
 General acceptability
 Durability
 Portability
 Homogeneity
 Divisibility
 Stability of value
5. The primary functions of commercial banks are: -
A. Accepting of deposit: - bank can provide chance of saving by providing interest
and avoid the danger of theft to community.
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B. Advancing loan: - the primary purpose of accepting deposit is to provide loan and
advance to one who has best business idea.
6.