Final answer:
The T-account is used to represent a bank's assets, liabilities, and net worth on a balance sheet, with assets always equaling liabilities plus net worth. This financial statement is crucial in displaying a bank's financial health and stability.
Step-by-step explanation:
The information provided discusses the T-account and the composition of a bank's balance sheet. A T-account is a visual representation separating a firm's assets on the left side from its liabilities and net worth on the right side. The net worth, also known as bank capital, is calculated as total assets minus total liabilities and is included on the liabilities side to ensure that the balance sheet is balanced, with assets always equaling liabilities plus net worth. This concept is crucial for both healthy and bankrupt firms when evaluating their financial stability. Assets in a bank, which include cash reserves and financial instruments such as loans and U.S. Treasury bonds, are offset by liabilities such as customer deposits and other borrowings. The bank's balance sheet is a financial statement that reflects the bank's financial position at a certain point in time, showing the value of the assets, liabilities, and net worth.