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And to make matters more confusing, deposits are called assets on the balance sheet!
by missedthecue 4y ago
And to make matters more confusing, deposits are called assets on the balance sheet!
- kgwgk 4y agoYou may feel relieved - and less confused - if I tell you that deposits are liabilities in the balance sheet.
- nulbyte 4y agoThat's not confusing, it's just wrong. On my balance sheet, money I deposit is an asset: The bank owes me. On the bank's balance sheet, money I deposit is a liability: The bank owes me.
- patmorgan23 4y agoYour deposit creates an equal asset and liability on the bank's balance sheet remember assets = liability + equity must balance.
- nulbyte 4y agoDeposits are liabilities to the bank's customers. The cash the bank has, regardless of how it got it, is an asset. The cash may result from a customer making a deposit, but its still just cash. Deposits and cash are separate items on the balance sheet. Here is an example from the Fed: https://www.federalreserve.gov/releases/h8/current/ https://www.federalreserve.gov/releases/h8/current/ Note that cash is a single line item. The banks could get that from other sources, such as loan repayments.