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2 December, 10:04

Consider a bank balance sheet, with "Assets" on the left and "Liabilities" on the right side. Identify where the following items belong. I. Deposits this bank holds in an account with another private bank. II. Borrowings from another bank in the interbank loan market. A. Both assets. B. I: liabilities; II: assets. C. I: assets; II: liabilities. D. Both liabilities.

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  1. 2 December, 13:58
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    C. I: assets; II: liabilities.

    Explanation:

    In the classified balance sheet, we summarize the asset and liabilities into various types

    Like assets are divided into fixed assets, current assets, and intangible assets.

    Likewise, liabilities are also divided into current liabilities, long term liabilities

    In every balance sheet, the accounting equation is used that means

    Total assets = Total liabilities + Shareholder equity

    In the first transaction, the deposit is made so the cash balance should be increased and hence, it is included in the asset account

    And, in the second transaction, the borrowings were made which is a liability. So, it is included in the liabilities account

    Hence, option C is correct
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