1. Banking and Money Creation
Understanding Assets and Liabilities

2. The T-Account: Assets and Liabilities
Mr. Bargen’s T-account
Assets
Liabilities
House $100,000
Car $10,000
Playstation $350
Mortgage $70,000
Car Loan $5,000
A T-account keeps track of an individual’s or business’s assets and liabilities:
assets (the things of value) on the left and
liabilities (amounts owed to others) on the right.

3. The T-Account: From a Bank’s Perspective
Mr. Bargen’s T-account
Assets
Liabilities
House $100,000
Car $10,000
Checking account at the bank $1,000
Playstation $350
Mortgage $70,000
Car Loan $5,000
Pinnacle Bank’s T-account
Assets
Liabilities
Loans $1,000,000
Reserves $100,000
Deposits $1,000,000
Notice that while bank deposits are an asset for Mr. Bargen, deposits are a liability to the bank (since for the bank, they are monies owed to others)