Final answer:
The depositor's checking account balance in the bank records is considered a liability for the bank because it represents money the bank owes to its customers.
Step-by-step explanation:
The depositor's checking account balance in the bank records is a liability. When bank customers deposit money into a checking account, savings account, or a certificate of deposit, these funds are liabilities for the bank because it owes that money to its customers. An example of this would be the Safe and Secure Bank, which holds $10 million in deposits. These are counted as liabilities on the bank's balance sheet.
A bank's balance sheet, just like any other entity, consists of assets and liabilities. An asset is something of value that the bank owns, like cash in its vaults or funds at the Federal Reserve Bank, which can be used to generate more income. A liability, on the other hand, is an obligation or debt that the bank must pay, such as the deposits made by its customers. The net worth of the bank is calculated as the total value of assets minus the total liabilities.