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Which of the following are reported as assets on a bank's balance sheet?A) borrowingsB) reservesC) savings depositsD) bank capital

Question

Which of the following are reported as assets on a bank's balance sheet?

A) borrowings
B) reserves
C) savings deposits
D) bank capital

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Solution

A bank's balance sheet is a financial statement that summarizes its assets, liabilities, and shareholders' equity at a specific point in time. Each of these components helps investors, creditors, and internal management understand how well a company is performing and areas of improvement.

A) Borrowings: These are not reported as assets on a bank's balance sheet. Instead, they are considered liabilities because they represent money that the bank owes to other entities.

B) Reserves: These are reported as assets on a bank's balance sheet. Reserves are funds that the bank holds as cash or deposits with the Federal Reserve Bank. They are assets because they represent resources that the bank can use to meet its obligations.

C) Savings Deposits: These are not reported as assets on a bank's balance sheet. Instead, they are considered liabilities. This is because the bank owes the money deposited into savings accounts to the account holders.

D) Bank Capital: This is not reported as an asset on a bank's balance sheet. Instead, it is part of the shareholders' equity section of the balance sheet. Bank capital represents the net worth of the bank or its value after all liabilities have been paid off.

So, out of the options given, only reserves are reported as assets on a bank's balance sheet.

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