On a T-account for a bank,
A) reserves and deposits are both assets.
B) reserves are assets and deposits are liabilities.
C) deposits are assets and reserves are liabilities.
D) reserves and deposits are both liabilities.

Question

Quizplus · Accepted Answer

Reserves are assets because they represent the funds that the bank holds in reserve to meet its obligations to depositors. Deposits, on the other hand, are liabilities because they represent the funds that the bank owes to its customers. Therefore, reserves are assets and deposits are liabilities.

On a T-Account for a Bank