Question:
In the context of Banking System, which of the following equation is correct?
In the context of Banking System, which of the following equation is correct?
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In banking, assets include both reserves and loans, which are the major components of a bank's balance sheet.
Updated On: Apr 21, 2025
- Asset = Reserve + loan
- Liabilities = Reserve - loan
- Asset = Reserve - loan
- Liabilities = Reserve + loan
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The Correct Option is A
Solution and Explanation
In banking systems, the equation "Asset = Reserve + loan" is correct. This is because a bank's assets are composed of reserves and loans given to customers.
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