Introduction to Bank Accounting

Identify banks as depository institutions that accept deposits, issue loans, and deal in securities. Provide services such as currency exchanges, safekeeping, treasury securities, and current accounts.

Explore the bank accounting system's core characteristics, including money as the product, investment management for returns, liquidity for withdrawals, regulatory data needs, and pricing decisions to enhance customer experience.

Start with the bank's balance sheet and outline financial statements—balance sheet, income statement, and statement of changes in stockholders' equity—and review asset and liability categories using the provided Excel file.

Explore balance sheet assets, including cash and due from banks, reserve funds, government securities, security holdings, and loans. Identify non-performing loans and other asset items.

Explain how deposits fund banks and identify demand deposits, now accounts, saving accounts, time deposits, and deposits from other banks, plus non-deposit borrowings and stockholders' equity as funding sources.

Explore off-balance sheet activities, including stand-by credit agreements, interest rate swaps, futures and options, long commitments, and foreign exchange contracts, and understand their risk to banks.

Analyze the income statement to measure bank profitability over a yearly period, noting revenues from services rendered or interest earned, and expenses like salaries and loan losses.

Examine the bank income statement from interest income and expenses to net interest income, loan-loss provisions, non-interest income and expenses, and net income before and after taxes.

Explore how banks reconcile the allowance for loan losses by adding current provisions and recoveries, subtracting charged-off uncollectibles, and calculating the end-of-year balance.

Explore how the statement of stockholders' equity tracks changes in capital accounts, including transfers from retained earnings to surplus, journal entries, and the impact on future dividends and permanent capitalization.

Explore the disclosure requirements for banks and similar financial institutions under IAS 30 Appendix 1, including the broad definition of a bank and related financial statements.

Wrap up the introduction to bank accounting and preview future modules on assets, liabilities and stockholders' equity, and performance evaluation in banks. Sign up for email notifications for upcoming courses.