Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

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Multiple Choice

In the context of financial statements, what are typically the largest asset and the largest liability on a commercial bank's balance sheet?

Investments (asset) and Shareholders' Equity (liability)

Cash (asset) and Bonds Payable (liability)

Buildings (asset) and Accounts Payable (liability)

Loans (asset) and Deposits (liability)

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Verified step by step guidance

Step 1: Understand the structure of a commercial bank's balance sheet. A balance sheet is divided into assets, liabilities, and shareholders' equity. Assets represent what the bank owns, liabilities represent what the bank owes, and shareholders' equity represents the residual interest in the assets after deducting liabilities.

Step 2: Recognize that for a commercial bank, loans are typically the largest asset. Banks primarily generate income by lending money to individuals and businesses, and these loans are recorded as assets because they represent amounts owed to the bank.

Step 3: Identify that deposits are typically the largest liability for a commercial bank. Deposits are funds that customers place in the bank, and the bank owes these funds back to the customers upon request, making them a liability.

Step 4: Compare the other options provided in the problem. Investments, cash, and buildings are assets, but they are generally smaller in magnitude compared to loans for a commercial bank. Similarly, shareholders' equity, bonds payable, and accounts payable are liabilities, but deposits are usually the largest liability.

Step 5: Conclude that the correct answer is loans (asset) and deposits (liability), as these are the most significant items on a commercial bank's balance sheet due to the nature of its operations.