How do deposits and reserves appear on a bank's T-account?
A) Both deposits and reserves are assets.
B) Both deposits and reserves are liabilities.
C) Deposits are assets, and reserves are liabilities.
D) Reserves are assets, and deposits are liabilities.

Question

Quizplus · Accepted Answer

Reserves are assets because they represent cash or equivalents held by the bank. Deposits are liabilities because the bank owes this money to its depositors. Therefore, reserves will appear on the left side of the T-account as assets (credit), and deposits will appear on the right side of the T-account as liabilities (debit).

How Do Deposits and Reserves Appear on a Bank's T-Account