Final answer:
In bookkeeping, items of value owned by a business or practice are called assets, which include reserves and loans made. Liabilities represent debts owed by the business, and the net worth equals assets minus liabilities.
Step-by-step explanation:
In bookkeeping and accounting, the things of value relating to a practice or business are called assets. These are important for creating a balance sheet, which showcases a firm's financial position at a certain point in time. The assets of a firm are shown on the left side of a T-account and represent financial instruments like reserves, loans made by the bank, and U.S. Government Securities. Liabilities, on the right side of the T-account, represent what the firm owes to others, such as bank deposits in case of a bank.
The difference between total assets and total liabilities is known as net worth or owner's equity. It's also accounted for on the liabilities side to ensure the T-account balances to zero. A positive net worth indicates a healthy business, while a negative one signals a firm that may be bankrupt.