USE THE CASE STUDY

Hamilton's policies induced others to fill out the other major components of a modern American financial system. The BUS prompted state legislatures to charter more banksthere were about thirty of these by 1800, more than 100 by 1810, 500-600 by the 1830s, and 1500-1600 on the eve of the Civil War. These banks were corporations, and the states also chartered many non-bank business corporations. Active securities markets emerged in the early 1790s when some $63million of new US national debt securities and $10million of BUS stock stimulated the development of trading markets in a number of cities and the establishment of stock exchanges in Philadelphia and New York. A distinctly modern US financial system did not exist in the 1780s but was firmly in place by the mid-1790s, after which it expanded rapidly to serve, even foster, the rapid growth of the US economy. The banking system was a key component of it.

Since most banks were business enterprises chartered by state legislatures, banking became highly politicized. A party in control of the legislature would grant bank charters to its backers and not those of the other parties. Banks also became sources of revenue: state governments invested in banks and earned dividends from them, they charged banks fees for granting charters of incorporation, and they taxed them. Individual legislators accepted bribes to help some banks get charters and to prevent other banks from getting them. By the 1830s, to get away from the politicization and corruption involved in legislative chartering, a few states began to enact "free banking" laws. These general incorporation laws made the granting of bank charters an administrative rather than a legislative function of government. This increased the access of Americans to banking. The result of free banking, according to banking historian Bray Hammond, was that "it might be found somewhat harder to become a banker than a brick-layer, but not much."

The BUS, the national or central bank, also proved to be politically controversial. Some thought it was unconstitutional and a threat to states' rights. Many state bankers resented its ability to compete with them, to regulate their ability to make loans, to branch across state lines, and to have the federal government's banking business to itself. When the BUS's charter came up for renewal in 1811, it was defeated by the narrowest of margins when the vice president broke a tie vote in the Senate. That weakened the ability of the government to finance the War of 1812. In 1816 Congress therefore chartered a second BUS, an even larger corporation than the first.

History repeated itself in the early 1830s when, after both houses of Congress voted to re-charter the BUS, President Andrew Jackson vetoed the bill and his veto could not be overridden. The second BUS, like the first, did a good job of regulating American banking and promoting financial stability. But Jackson thought it had too many privileges and was too friendly to his political opponents. The BUS federal charter expired in 1836. The United States would not again have a central bank until 1914 when the Federal Reserve Act went into effect.

Without a central bank to provide oversight of banking and finance, the expanding banking system of the 1830s, 1840s, and 1850s suffered from some major problems, even as it supplied the country with ample loans to finance economic growth. One problem was financial instability. Banking crises occurred in 1837, 1839-1842, and 1857, years when many banks had to suspend convertibility of their bank notes and deposits into coin because their coin reserves were insufficient. A good number of these banks failed or became insolvent when borrowers defaulted on their loan payments. The banking crises led to business depressions with high unemployment.

Another problem was a chaotic currency. In those days, the government provided only coins. Paper moneybank noteswas issued by just about every individual bank. By 1860 there were 1,500-1,600 such banks, most of which issued several denominations of notes. Hence, throughout the United States there circulated about eight to nine thousand different-looking pieces of paper, each with the name of a bank on it and a number of dollars which the named bank promised to pay in coin if the note were presented to it. It was costly, of course, to return a note of, say, a Georgia bank received in New York to the bank in Georgia, so such notes circulated at discounts the farther they were from the issuing bank. Note brokers earned a living by buying bank notes at a discount and returning themen masseto the issuing banks for payment in coin. This was not an efficient payments system for an expanding economy. Moreover, it was one in which counterfeiting of bank notes thrived because with so many different-looking notes in circulation, it was hard to tell a real one from a fake.

Abraham Lincoln's Union government during the Civil War solved the problem of a chaotic currency and at the same time the more pressing problem of how to finance the war. The solution, introduced in 1863, was to get the federal government back into the business of chartering banks. The new national banks, like free banks under earlier state laws, would issue a uniform national currency printed by the government and backed by US bonds. National banks had to purchase the bonds to back bank notes they issued, making it easier for the Lincoln administration to sell bonds and finance the war against the Southern confederacy. National bank currency would be safer than state bank notesif a bank defaulted or failed, the US bonds backing them could be sold to pay off holders of the failed bank's notes. In effect, national bank notes were a liability of the federal government, not the bank. Discounts on bank notes, a problem of the previous era, disappeared, improving the national payments system.

The intent of the National Bank law was that the old state banks would convert to national charters. But not all of them did, so Congress in 1865 passed a prohibitive tax on state bank notes. That ended the issue of state bank notes. But it did not end state-chartered banking because many state banks could continue as deposit-taking banks without issuing notes. Shortly after the Civil War most US banks were national banks. But by the end of the nineteenth century, state banking had recovered sufficiently to rival national banking. The United States had what came to be called a "dual banking system" of national and state banks, and the system persisted into the twenty-first century. National bank notes, however, disappeared in the 1930s, replaced by today's national currency, Federal Reserve Notes.

During the half century from 1863 to 1913, the country continued to be without a central bank. It had a uniform national currency and a better banking system than the one before 1863, but it was still prone to financial instability. Banking panics occurred in 1873, 1884, 1893, and 1907. The last was especially embarrassing because by 1907 the US economy was the largest in the world, as was the US banking system. There were about 20,000 banks in 1907, and there would be 30,000 by the all-time peak in the early 1920s. US bank deposits were more than a third of the total world deposits, and approximately the same as the combined deposits of German, British, and French banks, the next three largest systems. The European countries had central banksbankers' banksthat could lend to banks under stress, and as a result they had fewer banking crises than did the United States.Hamilton's policies induced others to fill out the other major components of a modern American financial system. The BUS prompted state legislatures to charter more banksthere were about thirty of these by 1800, more than 100 by 1810, 500-600 by the 1830s, and 1500-1600 on the eve of the Civil War. These banks were corporations, and the states also chartered many non-bank business corporations. Active securities markets emerged in the early 1790s when some $63million of new US national debt securities and $10million of BUS stock stimulated the development of trading markets in a number of cities and the establishment of stock exchanges in Philadelphia and New York. A distinctly modern US financial system did not exist in the 1780s but was firmly in place by the mid-1790s, after which it expanded rapidly to serve, even foster, the rapid growth of the US economy. The banking system was a key component of it.

Since most banks were business enterprises chartered by state legislatures, banking became highly politicized. A party in control of the legislature would grant bank charters to its backers and not those of the other parties. Banks also became sources of revenue: state governments invested in banks and earned dividends from them, they charged banks fees for granting charters of incorporation, and they taxed them. Individual legislators accepted bribes to help some banks get charters and to prevent other banks from getting them. By the 1830s, to get away from the politicization and corruption involved in legislative chartering, a few states began to enact "free banking" laws. These general incorporation laws made the granting of bank charters an administrative rather than a legislative function of government. This increased the access of Americans to banking. The result of free banking, according to banking historian Bray Hammond, was that "it might be found somewhat harder to become a banker than a brick-layer, but not much."

The BUS, the national or central bank, also proved to be politically controversial. Some thought it was unconstitutional and a threat to states' rights. Many state bankers resented its ability to compete with them, to regulate their ability to make loans, to branch across state lines, and to have the federal government's banking business to itself. When the BUS's charter came up for renewal in 1811, it was defeated by the narrowest of margins when the vice president broke a tie vote in the Senate. That weakened the ability of the government to finance the War of 1812. In 1816 Congress therefore chartered a second BUS, an even larger corporation than the first.

History repeated itself in the early 1830s when, after both houses of Congress voted to re-charter the BUS, President Andrew Jackson vetoed the bill and his veto could not be overridden. The second BUS, like the first, did a good job of regulating American banking and promoting financial stability. But Jackson thought it had too many privileges and was too friendly to his political opponents. The BUS federal charter expired in 1836. The United States would not again have a central bank until 1914 when the Federal Reserve Act went into effect.

Without a central bank to provide oversight of banking and finance, the expanding banking system of the 1830s, 1840s, and 1850s suffered from some major problems, even as it supplied the country with ample loans to finance economic growth. One problem was financial instability. Banking crises occurred in 1837, 1839-1842, and 1857, years when many banks had to suspend convertibility of their bank notes and deposits into coin because their coin reserves were insufficient. A good number of these banks failed or became insolvent when borrowers defaulted on their loan payments. The banking crises led to business depressions with high unemployment.

Another problem was a chaotic currency. In those days, the government provided only coins. Paper moneybank noteswas issued by just about every individual bank. By 1860 there were 1,500-1,600 such banks, most of which issued several denominations of notes. Hence, throughout the United States there circulated about eight to nine thousand different-looking pieces of paper, each with the name of a bank on it and a number of dollars which the named bank promised to pay in coin if the note were presented to it. It was costly, of course, to return a note of, say, a Georgia bank received in New York to the bank in Georgia, so such notes circulated at discounts the farther they were from the issuing bank. Note brokers earned a living by buying bank notes at a discount and returning themen masseto the issuing banks for payment in coin. This was not an efficient payments system for an expanding economy. Moreover, it was one in which counterfeiting of bank notes thrived because with so many different-looking notes in circulation, it was hard to tell a real one from a fake.

Abraham Lincoln's Union government during the Civil War solved the problem of a chaotic currency and at the same time the more pressing problem of how to finance the war. The solution, introduced in 1863, was to get the federal government back into the business of chartering banks. The new national banks, like free banks under earlier state laws, would issue a uniform national currency printed by the government and backed by US bonds. National banks had to purchase the bonds to back bank notes they issued, making it easier for the Lincoln administration to sell bonds and finance the war against the Southern confederacy. National bank currency would be safer than state bank notesif a bank defaulted or failed, the US bonds backing them could be sold to pay off holders of the failed bank's notes. In effect, national bank notes were a liability of the federal government, not the bank. Discounts on bank notes, a problem of the previous era, disappeared, improving the national payments system.

The intent of the National Bank law was that the old state banks would convert to national charters. But not all of them did, so Congress in 1865 passed a prohibitive tax on state bank notes. That ended the issue of state bank notes. But it did not end state-chartered banking because many state banks could continue as deposit-taking banks without issuing notes. Shortly after the Civil War most US banks were national banks. But by the end of the nineteenth century, state banking had recovered sufficiently to rival national banking. The United States had what came to be called a "dual banking system" of national and state banks, and the system persisted into the twenty-first century. National bank notes, however, disappeared in the 1930s, replaced by today's national currency, Federal Reserve Notes.

During the half century from 1863 to 1913, the country continued to be without a central bank. It had a uniform national currency and a better banking system than the one before 1863, but it was still prone to financial instability. Banking panics occurred in 1873, 1884, 1893, and 1907. The last was especially embarrassing because by 1907 the US economy was the largest in the world, as was the US banking system. There were about 20,000 banks in 1907, and there would be 30,000 by the all-time peak in the early 1920s. US bank deposits were more than a third of the total world deposits, and approximately the same as the combined deposits of German, British, and French banks, the next three largest systems. The European countries had central banksbankers' banksthat could lend to banks under stress, and as a result they had fewer banking crises than did the United States.

Question four

1.which statement represent the entity's equity; A. the main self-financing source for the entity's assets;

B. the monetary expression of the economic resources invested by the owners of the entity; C. the residual interest of the owners in the assets of the entity after deducting all liabilities; D. the value of that part of the company's assets to which the owners are completely entitled.

2. which statement define the asset of entity;

A. resources controlled by the entity as a result of present events, which are expected to generate future economic benefits for the entity and have a cost that can be realistically assessed;

B. resources controlled by the entity as a result of past events, which are expected to generate future economic benefits for the entity and have a cost that can be realistically assessed;

C. resources controlled by the entity as a result of past events, which are expected to generate present economic benefits for the entity, and have a cost can be realistically assessed;

D. resources controlled by the entity as a result of present events, which are expected to generate future economic benefits for the entity and have a cost that cannot be realistically assessed;

3. The gross income for the financial year is calculated according to the relation

4. The production cost of a fixed asset manufactured by an entity includes____________

5. The retail price (RP) of a product is calculated as follows

6. The book-keeping of stocks according to the everlasting inventory technique involves____________

7. Deferred incomes are incomes for which the recording moment_____________

8. Regarding the "Customers" account for January, the following information is available: total accounts receivable 250.000 lei, out of which the beginning accounts receivable balance is 50.000. The ending accounts receivable balance is 20.000. Calculate the value of sales to customers and the value of cash receipts from customers in January

9. A company has purchased a manufacturing installation in the following conditions: purchase price 30.000 lei, VAT 19%; expenses with the transport of the installation from the supplier to destination 900 lei; expenses with the preparation of the site where the installation will be placed (the installation must be fixed on a concrete stand with an angle of inclination of 12 degrees) 2.000 lei; the fee paid to the engineer in charge of the design and measurement of the site 1.500 lei. The company pays VAT and receives a 10% discount from the supplier. The acquisition cost of the manufacturing installation is:

10. Which of the following types of incomes are entirely included in the company's net turnover___________