Bank Balance Sheet (T-Accounts)

Definition

A bank balance sheet, also known as T-Accounts, is a financial statement that shows the assets and liabilities of a bank at a specific point in time. It provides a snapshot of the bank's financial position.

Analogy

Imagine you have a piggy bank with two sides - one for money you owe (liabilities) and one for money you own (assets). The balance sheet is like looking at both sides of your piggy bank to see how much money you have and how much you owe.

Related terms

Assets and Liabilities: These are the two main components of a balance sheet. Assets are what the bank owns, such as cash, loans, or investments. Liabilities are what the bank owes, such as deposits or borrowings.

Demand Curve for Money: This refers to the graphical representation showing the relationship between the quantity of money demanded by individuals or businesses and its interest rate.

Reserve Requirements: These are regulations set by central banks that determine the minimum amount of reserves commercial banks must hold against their deposits.