Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

How did the FDIC make fractional reserve banking less risky for consumers?

By requiring banks to hold 100% of deposits in reserve at all times.

By eliminating the need for banks to lend out deposits.

By insuring consumer deposits up to a certain limit, reducing the risk of loss if a bank fails.

By guaranteeing all bank investments will be profitable.

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Verified step by step guidance

Understand the concept of fractional reserve banking: Fractional reserve banking is a system where banks are required to keep only a fraction of their deposits as reserves, while the rest can be lent out to borrowers. This creates a risk for consumers if the bank fails and cannot return their deposits.

Learn about the FDIC (Federal Deposit Insurance Corporation): The FDIC is a U.S. government agency established to protect consumers' deposits in banks and promote stability in the financial system.

Recognize the FDIC's role in reducing risk: The FDIC insures consumer deposits up to a certain limit (e.g., $250,000 per depositor per insured bank). This insurance ensures that even if a bank fails, consumers will not lose their insured deposits.

Understand why the FDIC does not require 100% reserves: The FDIC does not mandate banks to hold all deposits in reserve because doing so would eliminate the ability of banks to lend money, which is essential for economic growth and investment.

Clarify misconceptions: The FDIC does not guarantee all bank investments will be profitable or eliminate the need for banks to lend out deposits. Its primary role is to provide deposit insurance to reduce the risk of loss for consumers in case of bank failure.