The listing that contains customer balances at the balance sheet date along with the breakdown of these balances by time since the sale is the aged trial balance. It is an essential document for managing accounts receivable and assessing credit risk. This aged trial balance can reflect the asset-liability time mismatch inherent in a bank's operations.
A document that provides a listing of the balances in the accounts receivable master file at the balance sheet date, including customer balances and a breakdown of each balance by the time passed since the sale, is known as the aged trial balance. It is a valuable tool for assessing a company's ability to collect on its receivables and managing credit risk. This breakdown helps in understanding the asset-liability time mismatch, which refers to the scenario where customers may withdraw a bank's liabilities in the short-term, while customers repay its assets in the long-term.
The money listed under assets on a bank balance sheet may not actually be in the bank since banks operate on the principle of fractional reserve banking, meaning they lend out most of the funds deposited with them. When buying loans in the secondary market, one would pay more or less for a loan based on the borrower's payment history, the current economic interest rates compared to the rates when the loan was originated, and the profitability of the borrowing firm.