Final answer:
A balance sheet lists a company's assets, liabilities, and owners' equity at a specific point, including cash and property as assets, and loans and mortgages as liabilities.
Bank balance sheets also include reserves and loans made to customers, with customer deposits as liabilities. Overall, the balance sheet balances by having assets equal liabilities plus net worth.
Step-by-step explanation:
A balance sheet is a financial statement that reflects a company's financial position at a specific point in time, listing its assets, liabilities, and owners' equity (OE).
Assets are valuable items owned by the company and might include cash, inventory, and property. Liabilities represent debts owed to others, such as loans and mortgages.
The difference between assets and liabilities is known as the net worth or the owners' equity, which indicates the value of the company's equity held by the owners after all debts have been paid.
For a bank, the balance sheet is similar but can include specific items such as reserves held at the Federal Reserve, loans made to customers, and U.S. Government Securities.
Deposits made by customers are considered liabilities. The net worth, or bank capital, is the total assets minus the total liabilities.
The balance sheet is often represented in a T-account format, with assets on the left and liabilities plus net worth on the right, ensuring that assets equal liabilities plus net worth.