Question

Consider the following accounts and identify each account as an asset, liability, or equity.

Answer 1

Assets for a bank include reserves, bonds, and loans, while liabilities refer to deposits made by customers. Net worth is the equity component of a bank's T-account.

Step-by-step explanation:

In a T-account, which separates assets on the left and liabilities on the right, a bank's assets include reserves, bonds, and loans. These assets represent the financial instruments that the bank holds or where other parties owe money to the bank. On the other hand, liabilities for a bank include deposits made by customers.

Reserves, bonds, and loans are examples of bank assets, while deposits are examples of bank liabilities. Net worth, also known as bank capital, is included on the liabilities side of the T-account to balance it to zero.

Therefore, based on the given information, the accounts can be classified as follows:

1. Assets: Reserves ($30), Bonds ($50), Loans ($50)
2. Liabilities: Deposits ($300)
3. Equity: Net worth ($30)