Question

Assets are ___.

a. equal to liabilities less stockholders' equity
b. the same as expenses because they are acquired with cash
c. always lower than liabilities
d. financed by the stockholders and/or creditors

Answer 1

Assets are what a company or individual owns and can be used to produce something. On a bank's balance sheet, assets include the financial instruments that the bank is holding or the amount owed by other parties. Liabilities represent what the bank owes to others, such as deposits made by customers. The net worth of a bank is calculated by subtracting the total liabilities from the total assets. In a healthy business, net worth will be positive, and on a bank's T-account, assets will always equal liabilities plus net worth.

Step-by-step explanation:

Assets are what a company or individual owns and can be used to produce something. On a bank's balance sheet, assets include the financial instruments that the bank is holding or the amount owed by other parties. Liabilities, on the other hand, represent what the bank owes to others, such as deposits made by customers. The net worth of a bank is calculated by subtracting the total liabilities from the total assets. In a healthy business, net worth will be positive, and on a bank's T-account, assets will always equal liabilities plus net worth.