Question

On a​ bank's balance​ sheet, ________ are assets and​ ________ are liabilities. A. ​reserves; loans and...

On a​ bank's balance​ sheet, ________ are assets and​ ________ are liabilities.

A. ​reserves; loans and transactions deposits

B. transactions​ deposits; reserves and loans

C. loans and transactions​ deposits; reserves

D. reserves and​ loans; transactions deposits

Business   Economics   
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Homework Answers

Answer #1

The correct answer is Option (D) Reserves and​ Loans; Transactions Deposits

Explanation:

The most important asset for a bank is loans. The reason is that loans are the primary source of income for the bank through interest revenue. In addition, reserves form an important part of assets that is used to satisfy daily cash withdrawal by customers.

For a bank, the most important liability is Transaction Deposit. These are the checking accounts or checkable deposits with the bank. The bank owes these deposits to customers and hence it comes under liabilities.

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