Customer deposits are classified on the balance sheet of Commercial Banks (CB) a

Question

Customer deposits are classified on the balance sheet of Commercial Banks (CB) as

liabilities, because the CB must meet reserve requirements on customer deposits.

liabilities, because the CB uses deposits as a source of funds and it is the amount owed to the depositors.

assets, because customers view deposits as assets.

assets, because the CB uses deposit funds to earn profits.

liabilities, because the CB must meet reserve requirements on customer deposits.

liabilities, because the CB uses deposits as a source of funds and it is the amount owed to the depositors.

assets, because customers view deposits as assets.

assets, because the CB uses deposit funds to earn profits.

Explanation / Answer

Customer deposits are classified on the balance sheet of Commercial Banks (CB) as

CORRECT ANSWER : B : liabilities, because the CB uses deposits as a source of funds and it is the amount owed to the depositors.

When customer put a deposit in bank, bank has to repay it on maturity. so for bank, customer deposits is a liability.

secondly, bank use this money to lend to other people and earn money on this deposits

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