Final answer:
A car loan balance is classified as a liability (L) on a personal balance sheet. For an individual, bank deposits are assets and loans are liabilities. However, for a bank, deposits are considered liabilities and loans are assets, contributing to the bank's net worth or capital.
Step-by-step explanation:
The car loan balance would be classified as a liability (L) because it represents a debt that the individual owes to the lender. A liability is something you owe that results in outgoing cash flows or payments.
In terms of a personal balance sheet, an individual would consider bank deposits as an asset because they represent funds the individual has and can use. Conversely, loans taken out are considered liabilities since they are amounts the individual is obligated to repay. In contrast, on a bank's balance sheet, deposits are counted as liabilities because they are customer funds that the bank owes back, while loans are considered assets since they represent money the bank will receive in the future, along with interest. The net worth for a bank is the total asset value minus its liabilities, which is also referred to as bank capital.