Which of the following is a liability of a bank and an asset of its customers?
A)deposits of its customers and loans to its 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 considered liability because the bank owes the customers the deposited amount, while for the customers, the deposits are assets as they can withdraw the amount or use it for payments. Loans, on the other hand, are liabilities for customers as they owe the bank the borrowed amount plus interest, while for the bank, they are assets as they expect to receive the amount back with interest. In this case, only option B mentions deposits of customers as a liability of the bank and not loans, which makes it the correct answer.

Which of the Following Is a Liability of a Bank