Final answer:
A T-account is an accounting tool that shows the debit and credit sides for tracking increases and decreases in various accounts, ensuring that assets always equal liabilities plus net worth. For banks, assets typically include reserves and loans, while liabilities consist of customer deposits.
Step-by-step explanation:
The question is referring to the use of T-accounts in accounting, which are tools used to visualize the transactions and balances of different accounts. In a T-account, the left side (known as the debit side) is used to record increases in asset accounts, expenses, and dividend accounts or decreases in liability accounts, equity accounts, and revenue accounts. The right side (known as the credit side) records the opposite. The essential concept in accounting is that assets must always equal liabilities plus net worth, which is represented in the layout of the T-account.
For banks, assets include reserves, loans made, and securities purchased, while liabilities include deposits and funds owed to others. The net worth, or equity, represents the difference between the total assets and total liabilities and is included on the liabilities side so that the T-account balances. If the net worth is positive, it indicates a healthy financial status; if negative, it indicates financial distress or bankruptcy.