Which of the following lists the correct order of entities that benefit when banks make a profit?

• A. Government (via taxes), employees, shareholders
• B. Customers, employees, government (via taxes)
• C. Employees, government (via taxes), shareholders
• D. Shareholders, government (via taxes), employees

Answer: (D)

Verified step by step guidance

1. Understand the question: The problem is asking for the correct order of entities that benefit when banks make a profit. This involves understanding the flow of benefits from a financial perspective.
2. Step 1: Recall the hierarchy of financial benefits. Shareholders are the owners of the bank and are the primary beneficiaries of profits through dividends or retained earnings. Therefore, they are first in line.
3. Step 2: Next, consider the government. The government benefits through taxes on the bank's profits. This occurs after the shareholders' benefits are accounted for.
4. Step 3: Finally, employees benefit through salaries, bonuses, and other compensation, which are typically determined after the bank's profits and tax obligations are calculated.
5. Step 4: Based on this reasoning, the correct order of entities that benefit when banks make a profit is: Shareholders, government (via taxes), employees.