Final answer:
On a personal balance sheet, deposits are assets, and loans are liabilities. On a bank's balance sheet, deposits are liabilities, and loans are assets.
Step-by-step explanation:
On a personal balance sheet, bank deposits and loans would be characterized as assets and liabilities. Bank deposits, such as money held in a checking or savings account, would be considered an asset as it represents funds that you own. Loans, on the other hand, would be categorized as liabilities as they represent money that you owe.
In contrast, on a bank's balance sheet, deposits and loans are also categorized as assets and liabilities. Deposits made by customers are considered liabilities for the bank, as the bank owes the customers the deposited funds. Loans made by the bank are considered assets, as they represent the money the bank lends to borrowers.
Overall, while the characterization of deposits and loans as assets and liabilities is similar on personal and bank balance sheets, there is a difference in perspective. On a personal balance sheet, deposits are assets because they represent funds you own, while loans are liabilities because they represent money you owe. On a bank's balance sheet, deposits are liabilities because the bank owes the customers the deposited funds, and loans are assets because they represent money lent by the bank.