UG 010 American Academy of English Banking and Insurance Companies Accounting Paper

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COLLEGE OF BANKING AND FINANCIAL STUDIES DEPARTMENT OF UNDERGRADUATE PROGRAMME B.Sc. in Accounting, Auditing and Finance ASSIGNMENT 1 BRIEF – Individual Assignment Assessment Component : 50% Student Name Semester Three Year 2019- 2020 (Summer Semester ) Assignment Title Module Banking and Insurance Companies Accounting UG010 Banking and Insurance Assessor: Companies Accounting Start Date: 23 July 2020 Due Date: 13 August 2020 Joyce Noronha Internal Verifier Mr. H. Lakmal Required Work, Format and Grading You must submit the following by the assignment due date: ▪ Completed answers to each task, satisfying each outcome criteria. ▪ Separate answers for each task. Assignments without TURNITIN report will not be accepted. Resources: You need to demonstrate a confident application of the theories to the assignment task. The theoretical underpinning of your observations and deliberations should also demonstrate a good understanding of the subject by the way that your analysis is structured. You can access the Internet to research about the topic. You should demonstrate good academic practice by the appropriate use of academic texts and journals that are properly referenced. Guidelines and further information about assignment: Assignment must be submitted with the “Turnitin” report. If the report generated UG -AAF /Summer 2020/ BICA – Assignment 1 Page 1 indicates a similarity index percentage of 20% or more, a review of your assignment is necessary to ensure the same is reduced to less than 20%. Student declaration: I certify that the work contained in this assignment was researched and prepared by me: Signature: ___________________________ Date: ___________________ The user ID and Password for submitting the soft copy of the report through TURNITIN is as follows: Class ID: 25522374 Enrolment Password: UG010 Submission time and date You should submit the assignment by the time and date mentioned otherwise a ‘NA’ will be awarded. Fill in the form cover and staple it with your assignment. Make sure that all the relevant details are complete. Assignments must be submitted by the due date. You may include diagrams, figures etc without word penalty. Plagiarism Writing Summary 1. Plagiarism occurs if you use somebody else’s work in an assignment or exam answer, but fail to state where you got the material from. You need to be also very careful about the amount of words you are using from somebody else’s work. 2. It can happen in any type of assessment where you are given the questions or tasks in advance. 3. If another student uses your work in his/her answer(s), both you and he/she will be punished when caught. 4. Punishments for committing plagiarism can be very severe. UG -AAF /Summer 2020/ BICA – Assignment 1 Page 2 Details Plagiarism is a form of cheating in which students use the work of others and present it as their own. It may include all or any one of the following – 1. Copy extensively from the work of others (from sources such as books, magazines, journal, websites etc.) and submit the work as your own. 2. Copy another students’ work and submit it for assessment under your own name. 3. Allow another student to copy your work and then submit it for assessment under their own name. What happens if you get caught? The examining body of CBFS may punish offending students in any manner that they deem fit. Typical punishments may range from reduction in grades, making students re-sit modules and even failing students on a module or an entire award. The college considers this form of cheating as a serious offence. Therefore, be forewarned! There are 3 tasks. You are free to distribute the words based on the marks set aside for each task. However, the maximum word limit is 2000 words. Task 1: Maximum Marks: 7 Question 1: Assess the need for capital in banks Task 2: Maximum Marks: 20 +5+5 =30 Question 1: Using examples apply the 5-step model of revenue recognition. Question 2: Critically evaluate the need for classification of assets (loans) Question 3: Read Circular BM 977 and assess the criteria used for classification of loans by the Central Bank of Oman. You may access the circular using the link given below: https://www.cbo.gov.om/sites/assets/Documents/English/Circulars/Booklet/CircularBooklet.pdf UG -AAF /Summer 2020/ BICA – Assignment 1 Page 3 Task 3: Maximum Marks: 7+6= 13 Question1: Explain the reserve requirements for bank as provided in the Banking Law of Oman and the Commercial Company Law of Oman Question 2: Assess the reasons why banks are required to maintain different types of reserves with the Central bank of Oman END OF ASSIGNMENT UG -AAF /Summer 2020/ BICA – Assignment 1 Page 4
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COLLEGE OF BANKING AND FINANCIAL STUDIES
DEPARTMENT OF UNDERGRADUATE PROGRAMME
B.Sc. in Accounting, Auditing, and Finance
ASSIGNMENT 1 BRIEF – Individual Assignment
Assessment Component: 50%

Student Name
Semester

Three

Year

2019- 2020
(Summer Semester)

Assignment Title

Module

Banking and Insurance Companies Accounting

UG010 Banking and Insurance

Assessor:

Companies Accounting
Start Date:

23 July 2020

Due Date:

13 August 2020

Joyce
Noronha

Internal Verifier

Mr. H.
Lakmal

Student declaration:
I certify that the work contained in this assignment was researched and prepared by me:
Signature: ___________________________

Date: ___________________

BANKING AND INSURANCE COMPANIES ACCOUNTING

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Task 1: The need for capital in banks
Capital is crucial since it is part of assets that could be utilized to reimburse its customers,
depositors, and other petitioners if a banking institution has insufficient liquidity because of losses
it endured in its tasks (Bitar et al., 2016). Capital does not comprise of claims by the equity holders
of the banks. Banks need capital to guarantee the survival or endurance of their business
undertakings why they experience unforeseen losses. Besides, banks need capital to make sure that
the unforeseen losses don’t prompt non-conformity with minimum capital requirement whereby
the shareholders will have to shift the bank’s control to the government. Banks need capital to
circumvent excessive financial expenses for other options of financing than the deposit options.
For instance, the bank will have to pay higher interest rates on the loans from different
banking institutions or bonds given by banks if the excess capital reserves of a bank are discovered
to be inadequate. Huge banks are interested in maintaining their good rankings and thus have
substantial excess capital reserves determined by the market forces (Bitar et al., 2016). Typically,
rating agencies make the demands about the excess capital reserves of a bank as a high rating
condition. Besides, adequate capital reserves help banks enter into massive exposures without the
need to raise other capital.
Alternatively stated, the capital of a bank is a cushion" for possible losses, and secures the
depositors, along with other lenders of the bank. That's why most nations characterize and track
CAR (capital adequacy ratios) to protect their depositors from upholding confidence within the
banking system. CAR, in general, is described as the ratio that establishes the capacity of a bank
to meet time liabilities and other risks like operational and credit risk.
Task 2: Five-step model of revenue recognition.

BANKING AND INSURANCE COMPANIES ACCOUNTING

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Revenue recognition demonstrated the transfer of assured services or goods in an amount
which replicates ways in which an enterprise anticipated to be compensated. It has five
significant steps (Jones & Pagach, 2013). These steps are as follows:
Step 1: identifying contracts with customers
This revenue recognition step, for example, is typical for the franchisors since they contain
an inscribed franchise contract, which stipulated the obligations, the rights, together with the
payment terms of a party (Yeaton, 2015). Also, this agreement contains "commercial substance,"
implying that the cash flows of the two parties are anticipated to change due to the agreement.
Furthermore, the franchisors will have to take supplemental steps toward establishing the
collectability dependent on franchisee's credit underwriting.
Step 2: identifying the obligations of performance
This second step determines what is being provided or delivered to a consumer. It is one
of the progressively momentous changes since the contract could have a minimum of one
performance duty, and every duty/obligation will have to be quantified (Jones & Pagach, 2013).
An example of it is as follows. Take into account if a customer could benefit or use for the service
or good on its own. If they possibly could, that's perhaps a distinct performance obligation. For
instance, a client will agree with an agreement of purchasing equipment with a free maintenance
year.
Step three: determination of a transaction price
This step, on the other hand, needs an entity to establish a transaction price. A transaction
price, in general, refers to the consideration amount that an entity awaits to be entitled to in place
of promised services or goods (Yeaton, 2015). This amount excludes the amounts collected on the

BANKING AND INSURANCE COMPANIES ACCOUNTING

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third party's behalf, for instance, the taxes imposed by the government. Commonly, an entity
should establish the amount of contemplation to which it anticipated to be eligible to acknowledge
revenue. For example, the transaction price may comprise of variable consideration, which must
be gauged either as the expected value, which signifies the sum or the aggregate of the probabilityweighted amounts for several probable outcomes. The possible amount signifies the quantity
possible in an array of conceivable amounts.
Step four: Allocation of the Transaction Price to Performance Obligations
If there exist several performance obligations, a transaction price should be assigned to
every performance obligation on a moderate standalone basis (Yeaton, 2015). Generally, the most
suitable way of doing this to compile the standalone of a performance obligation if it were to be
sold by entity distinctly. If the ...


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