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Bank Balance Sheet By Charos Aslonovna | Submitted On November 07, 2017 Recommend Article Article Comments Print Article Share this article on Facebook Share this article on Twitter Share this article on Google+ Share this article on Linkedin Share this article on StumbleUpon Share this article on Delicious Share this article on Digg Share this article on Reddit Share this article on Pinterest A balance sheet of a bank shows all financial operations conducted by a bank for a certain period of time. It reveals the borrowed funds by them, their own funds, their sources, their placements in credit and other transactions. It is recorded in the two ways. In the left part (asset) all assets are reflected and in the right (passive) - liabilities and capital of the bank are positioned. An asset is anything that can be old whereas a liability is an obligation of the financial institution that must be eventually paid back. The owner's equity in a bank is often referred to as bank capital, which is the remaining amount when all assets have been sold and all liabilities have been paid. The relationship of all balance sheet components can be simply described by the following equation. Bank Assets = Bank Liabilities + Bank Capital Assets earn revenue and include: -Cash in hand; -Funds on correspondent accounts; -Funds in reserve funds of the bank; -Granted loans to legal entities and individuals; (client loan portfolio) -Interbank loans granted; -Government bonds; -Commercial securities; Depending on the nature of the sources of funds, all liabilities differ in terms of their duration and cost. The main sources of funds as a rule, are deposits of individuals and legal entities, and in addition, funds of central (national) banks and loans obtained from other commercial banks. Liabilities: -Funds of banks and other credit institutions; -Clients accounts, including household deposits; - The promissory notes issued by the bank; By using liabilities the owners of banks can leverage their capital to earn much more value than would otherwise be possible using only the bank's capital. Also, Central banks regulate bank liabilities by setting mandatory reserve requirements from attracted deposits or by imposing administrative restrictions or incentives. Assets and liabilities are further distinguished as being either current or long-term. Current assets are assets expected to be sold or otherwise converted to cash within 1 year; otherwise, the assets are long-term. Current liabilities are expected to be paid within 1 year; otherwise, the liabilities are long-term. Current assets and current liabilities are important in assessing liquidity of bank. The deduction of Current assets from Current liabilities gives us a working capital. It is a measure of liquidity. An excess in Working capital a bank is able to meet its short- term liabilities Working Capital = Current Assets - Current Liabilities Banks can also get more funds either from the bank's owners, and these sources are referred as bank capital. Bank capital (= total assets - total liabilities) is the bank's net worth. However, recent accounting changes have made it more difficult to determine a bank's true net worth.

I was surprised when I asked parents to tell me the life skills they wish their kids knew, and there was a resounding request for kids to learn how to open a bank account. Similarly, there was a huge call out for: How to budget & balance accounts How to write checks and pay bills And how to start saving for retirement It seems some of the things we take for granted are, as a result, missing from what we teach kids. This article is the first article in the four-part series and will discuss the best and simplest way to get started with opening a bank account. It seems easy, but there are several questions many people never think of that we'll address in this article: Which bank? Checking or savings account? Are there fees or minimum balances? Should I get a Debit Card too? Should I have my name on the account with my kid? 1. Choosing a Bank When you choose a bank, there are a few criteria you'll want to look at: Location Number of branches Ease of access The location should be convenient to your home, but also have enough branches so that - in the case of an emergency - you can get to your bank. I opened an account with Elevations Credit Union when I was attending CU Boulder. It was convenient and credit unions are really great to bank with. However, after I graduated and moved, there were no branches around me, which made things very inconvenient. I ended up opening an account with US Bank since they are in about every King Soopers, where I do my grocery shopping. This is especially important with kids because you don't want them to have to drive too far just to bank. Similarly, ease of access into the branch is important. I remember having a Norwest (now Wells Fargo) account, and getting in and out of the bank's parking lot was terrible. I had several near-miss car accidents and dreaded even going to the bank. 2. Checking or Savings Account As you'll learn in the future article about saving and budgeting, there should be an account that is used for saving and investing. That means it's important to have BOTH a checking and savings account. The reason a checking account is important, is so that kids can learn how to write checks, and have a designated spending account aside from a designated savings account. Checking accounts are important for paying bills (be it online or via mail) and will give kids the opportunity to learn how to write checks. Even if check writing isn't as prevalent as it once was, it's still important. I was shopping one day and realized I forgot my wallet, which had my credit cards and cash. I started to panic because I needed some food. Fortunately, I keep a couple of checks in the car and was able to save myself by writing a check... they still come in handy! 3. Fees & Minimum Balances Some banks have fees to have an account and others don't. Obviously get the one that doesn't since your kid shouldn't have a huge account. Likewise make sure there isn't a minimum balance or a very small ($10 or less) minimum balance. Just as important is how overdrafts are handled! When I was in college, it never failed: my peers (who hadn't learned how to balance an account) would routinely trigger their overdraft protection and the hefty fees that went along with it. They would look at their balance online and it would show $10. Then they'd check it again a few days later and it was at $30. It was the magical growing bank account; and they never wondered where the extra money came from. Until the end of the month when they had over $200 in overdraft protection fees! I would suggest NOT getting overdraft protection and instead making darn sure they can balance their account (which we'll cover in a future article). 4. What About a Debit Card? Here's my thoughts on kids having debit cards: it makes it much, much harder to balance the bank account while making it much easier to overspend and run into trouble. Are ATM machines convenient? Yes, but I have never once used one in my entire life. Part of teaching kids life skills is to teach them to be prepared. I keep an extra $10 in cash plus a few checks in my car. It wouldn't bother me if it got stolen. If you're determined that your kid gets a debit card, wait at least six months after opening their account so they can learn "the old fashioned way" and understand how the debit card affects their account when they actually start using it. 5. Should I Be On The Account Too? I think it's a very good idea for you to be on your kid's first account so you can monitor their spending and make sure they don't cause a train wreck. It's good to get statements so that you can use that as a learning experience to go over them with your kid and teach them how to properly dispose of them (in a shredder) so that they decrease their risk of identity theft. Come up with a time frame or benchmarks until you pull yourself off the account and let your kid take on the responsibility of an individual account. Opening a bank account is a huge step into a new world for kids and it should be a great experience. Walk your kids through the setup and look for the learning opportunities along the way. Arm your kids with financial skills and hacks... Check out the article about getting financial aid for college! Article Source: http://EzineArticles.com/9772248

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