Accounting for financial institution Section 1 Assistant lecture Alya elfedawy

Fill in gap : Institution that deals in ……… and its substitutes and provides other financial services. (money) Banks accept ………. and make ………… to customers, (deposits , loans ) . Banks can achieve profit if …….. Is more than ……….. ( interest earned , interest paid )

Banks derive a ……. from the difference in the ……… Banks derive a …….. from the difference in the ………. paid to lenders (depositors) and charged to borrowers, respectively. (profit , interest ) bank can make a ……… if it had interest earned lower than interest paid . ( loss ) the roles of commercial banks services offered are: Exchange of currency and commercial notes and loans Financial advices and cash management Risk management role Savings and investment advisor

ويمكن توضيح مدخلات البنك (In puts) وايضا مخرجاته (Out puts) كما يلى: Loans Deposits Banks Make Accept - + charged Paid Interest Earned Interest Paid Profit = IE - IP Definitions & types Dr Makram Bassily

Classifications'banks The three major classes of banks are: 1 - commercial banks, 2 - investment banks, 3 - central banks Central bank act as: The only fiscal agent of the government Has the right to issuing notes to be used as legal tender Supervising the operations of the commercial banking system and implementing monetary policy All of the above

E.X : Suppose that the branch of national bank in mansoura had adeposit of value 10000$ with interest %10 . Require : Determine the kind of manager if you know that he had keep with liquidity percentage %30 . How money it takes on the depositer ?

1. Commercial banks: Interest paid interest earned Depositers Borrowers

Balance sheet Loans Liabilities Assets Deposits Cash Non deposits Reserve Investment Owners’ Equity Net liabilities Net assets

Assets = Liabilities + Owners’ Equity

Demand deposits NOW accounts Saving deposits Time deposits customer deposits ايداع تحت الطلب Checking accounts traditional saving accounts اوراق الادخار certificate of deposits شهادات الاستثمار Non- interest Individuals and not-for profit lowest interest rate stipulated interest rate

Example Suppose that the branch of national bank in mansoura had a deposit of value 100,000$ with interest %10 and had a loans of value 50,000 with interest %8 . Require 1. Determine the type of manager if you know that the investment percentage 40% . 2. Determine , what’s paid and what’s earned ?