Final answer:
A balance sheet is an accounting tool showing a firm's financial position, listing both assets and liabilities. Bank capital, or net worth, is derived from the balance sheet, and banks face an asset-liability time mismatch due to the different maturities of their assets and liabilities. Coins, currency, and commodity money are currencies with inherent value.
Step-by-step explanation:
The balance sheet is an essential accounting tool in business and finance that reflects a company's financial position at a particular moment in time by listing its assets and liabilities. Assets represent items of value that a firm or individual owns, such as cash in a bank's vault, and are used to produce value or generate revenue. Liabilities are debts or obligations owed, like customer deposits or mortgages that are shown on the opposite side of the balance sheet. Bank capital, also referred to as a bank's net worth, is calculated by deducting liabilities from assets. A specific challenge for banks is the asset-liability time mismatch, where the bank's liabilities, like customer deposits, can be withdrawn in the short term whereas assets, primarily customer loans, are expected to be repaid over a longer term. Bartering, the direct exchange of goods or services without money, is not represented on a balance sheet, but it is an important part of economic history. Coins and currency in circulation, along with commodity money, are forms of money that have value both as currency and as commodities themselves, like gold coins.