Question

Draw an empty bank balance sheet, with the heading
“Assets” on the left and the heading “Liabilities” on
the right. Then place the following items on the
proper side of the balance sheet. (See pages 348–349.)
a. Borrowings from another bank in the interbank
loans market
b. Deposits this bank holds in an account with
another private bank
c. U.S. Treasury bonds
d. Small-denomination time deposits
e. Mortgage loans to household customers
f. Money market deposit accounts

Answer 1

The bank's balance sheet is shown below, and there are two major headings, one is the “Assets” side on the left side and the other has a heading “Liabilities” which is shown onthe right. Note that borrowings from another bank, Small-denomination time deposits and Money market deposit accounts are shown on the liabilities side because bank cannot retain them forever. These are to be paid/withdrawn by the actual owner. Similarly, Deposits this bank holds in an account with another private bank, U.S. Treasury bonds, and mortgage loans to household customers are a part of assets because the ownership lies with the bank.