Question

When it comes to balance sheets. how are a bank's assets and liabilities much different than...

When it comes to balance sheets. how are a bank's assets and liabilities much different than a regular company's balance sheet?

Homework Answers

Answer #1

For a regular company, assets are plant, property, equipment, etc which are used to generate sales and its liabilities are typically borrowing from banks, payable to suppliers, etc.

For a bank, the loan to a regular company is classified as an asset, because the bank will earn interest income from that loan. A liability for a bank is the borrowing the bank does from individual depositors or from the central banks.

Hence, these are very different balance sheets.

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