Which of the following is a primary function of commercial bank loans?

• A. Preparing financial statements for public companies
• B. Providing short-term and long-term financing to businesses and individuals
• C. Auditing the financial records of government agencies
• D. Setting accounting standards for nonprofit organizations

Answer: (B)

Verified step by step guidance

1. Understand the role of commercial banks: Commercial banks primarily serve as financial intermediaries, providing various financial services to businesses and individuals.
2. Identify the primary function of commercial bank loans: Commercial bank loans are designed to offer short-term and long-term financing to meet the needs of businesses and individuals, such as funding operations, purchasing assets, or managing cash flow.
3. Eliminate unrelated options: Preparing financial statements, auditing records, and setting accounting standards are not functions of commercial bank loans. These tasks are typically performed by accountants, auditors, or regulatory bodies.
4. Focus on the correct option: The correct answer highlights the core purpose of commercial bank loans, which is to provide financing solutions tailored to the needs of borrowers.
5. Conclude with the importance of this function: By offering loans, commercial banks play a critical role in supporting economic growth and enabling businesses and individuals to achieve their financial goals.