Multiple Choice
Which of the following lists the correct order of the loss-limitation rules applied to pass-through entities for tax purposes?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT an example of a financial intermediary?
A
Mutual fund
B
Manufacturing corporation
C
Insurance company
D
Commercial bank
Verified step by step guidance1
Step 1: Understand the concept of a financial intermediary. A financial intermediary is an entity that acts as a middleman between two parties in financial transactions, such as savers and borrowers. Examples include banks, mutual funds, and insurance companies.
Step 2: Analyze the options provided in the question. Mutual funds, insurance companies, and commercial banks are all financial intermediaries because they facilitate the flow of funds between parties.
Step 3: Consider the role of a manufacturing corporation. A manufacturing corporation is not a financial intermediary because its primary function is to produce goods and services, not to facilitate financial transactions.
Step 4: Identify the correct answer based on the analysis. The manufacturing corporation does not fit the definition of a financial intermediary, unlike the other options provided.
Step 5: Conclude that the correct answer is 'Manufacturing corporation,' as it is not an example of a financial intermediary.
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