Question

On a bank's t-account, which are part of the bank's assets?

a. both deposits made by its customers and reserves
b. deposits made by its customers but not reserves
c. reserves but not deposits made by its customers
d. neither deposits made by its customers nor reserves

Answer 1

C. Reserves but not deposits made by its customers.

A bank holds some of its money in different deposit accounts by its customers. These are liabilities because they can be either demand or time deposits, for which the customer expects to be paid. The reserves, however, are the actual bank assets that can be loaned out to customers to derive revenue for the bank and they are held as part of the bank's assets.