Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at Southwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and increase v the debt v account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following is true of the capital requirement? Check all that apply. O Its intended goal is to protect the interests of the depositors. O Its intended goal is to protect the interests of those who hold equity in the bank. O It specifies a minimum leverage ratio for all banks.

Principles of Accounting Volume 1
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Chapter7: Accounting Information Systems
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Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.
Bank's Balance Sheet
Assets
Liabilities and Owners' Equity
Reserves
$200
Deposits
$1,600
Loans
$800
Debt
$250
Securities
$1,000
Capital (owners' equity)
$150
Suppose a new customer adds $100 to his account at Southwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new
loans. This would increase the loans account and increase
the
debt
account.
This would also bring the leverage ratio from its initial value of
to a new value of
Which of the following is true of the capital requirement? Check all that apply.
Its intended goal is to protect the interests of the depositors.
Its intended goal is to protect the interests of those who hold equity in the bank.
It specifies a minimum leverage ratio for all banks.
Transcribed Image Text:Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at Southwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and increase the debt account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following is true of the capital requirement? Check all that apply. Its intended goal is to protect the interests of the depositors. Its intended goal is to protect the interests of those who hold equity in the bank. It specifies a minimum leverage ratio for all banks.
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