Which one of the following statements is TRUE?
A) Demand deposits are assets of a bank.
B) A bank's assets plus its liabilities equals must equal zero.
C) A bank's reserves can only be kept as cash in its vault.
D) Assets generate income for a bank.

Question

Quizplus · Accepted Answer

Assets generate income for a bank through the interest and fees earned on loans, investments, and other financial products. Demand deposits are liabilities of a bank, reserves can be kept as cash or deposits with the central bank, and a bank's assets plus its liabilities must equal its equity, not necessarily zero.

Which One of the Following Statements Is TRUE