Which of the following is a liability of a bank and an asset of its customers?
A)deposits of its customers and loans to it customers
B)deposits of its customers but not loans to its customers
C)loans of its customers but not the deposits of its customers
D)neither the deposits of its customers nor the loans to its customers

Question

Quizplus · Accepted Answer

Deposits of customers are a liability of the bank as they owe that money to their customers, while it is an asset of customers who have deposited the money as they can withdraw it or use it as required. Loans of customers are liabilities of the customers themselves as they owe that money to the bank. Therefore, the only option which satisfies the given conditions is B, which states that deposits of customers are liabilities of the bank, but not loans to its customers, which are liabilities of the customers themselves.

Which of the Following Is a Liability of a Bank