|Posted on May 24, 2014 at 9:35 AM|
A balance sheet (or t-account) keeps record of a commercial bank's assets and liabilities after each banking transaction.
An example of a liabilitiy is a demand deposit (checkable deposit) because the bank must pay its depositors on demand. An example of an asset is a loan issued by the bank because the debtor must repay the loan amount to the bank.
This No Bull Review video explains how to record a bank's transactions using a balance sheet. It also discusses the role of required reserves and excess reserves in money creation.
AP Macroeconomics Unit 4 Monetary Policy