Final answer:
On a personal balance sheet, bank deposits are assets and loans are liabilities. On a bank's balance sheet, this is reversed: deposits are liabilities and loans are assets because of their different roles in the financial system.
Step-by-step explanation:
When you assess your personal balance sheet, bank deposits would generally be characterized as assets, as they represent funds that you own and can access. On the other hand, any loans you have taken out would be listed as liabilities, as these are debts that you are obligated to repay. Banks, however, see these items from the opposite perspective due to their role in the financial system.
For a bank, deposits made by customers are liabilities because the bank owes this money back to the depositors. In contrast, loans issued by the bank are considered assets, as they generate interest income for the bank, and the bank expects them to be repaid. This reflects the fundamental difference in perspective where an individual views money on hand as an asset, while a bank views money it owes as a liability and money that is owed to it as an asset.