Final answer:
The balance sheet is also known as the Statement of Financial Position. It details a company's assets and liabilities at a particular time, with a bank's balance sheet including assets like cash and loans and liabilities such as deposits and loans from others.
Step-by-step explanation:
The balance sheet is also referred to as the Statement of Financial Position. It is not to be confused with the Statement of Retained Earnings, Statement of Income, or Statement of Cash Flows, as each of these serves a different purpose in financial reporting. A balance sheet provides a snapshot of a company's financial standing at a specific point in time by listing its assets, liabilities, and net worth, which is known as bank capital in the context of a bank.
Specifically, for a bank, assets may include items like cash in the vaults, reserves held at the Federal Reserve, loans to customers, and bonds. Liabilities consist of obligations such as deposits from customers, loans, and others. The net worth of a bank is calculated by subtracting the total liabilities from the total assets. When the assets are lesser than the liabilities, a bank can end up with a negative net worth. Because of the two-column format, the balance sheet is sometimes described using the 'T-account' terminology, especially in academia and professional accounting.