Question

Which is true regarding assets and liabilities? Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices Morrie's student loan is an asset from Morrie's perspective. Jane's car loan is a liability from Jane's perspective; this same loan is also viewed as a liability from the bank's perspective. Assets are greater than liabilities when there are positive capital requirements. Bank deposits at the Federal Reserve are a liability for the bank.

Answer 1

Answer:

Assets are greater than liabilities when there are positive capital requirements.

Explanation:

• Morrie's student loan is an asset from Morrie's perspective. {false}

Morrie's student loan is a liability form his/her perspective. It is an asset for the borrower of the loan, usually a bank.

• Jane's car loan is a liability from Jane's perspective; this same loan is also viewed as a liability from the bank's perspective. {false}

This is one is half true, half false because Jane's loan is a liability from her perspective, but for the borrower, the bank, it is an asset.

• Assets are greater than liabilities when there are positive capital requirements.{true}

Because Working Capital = Current Assets minus (-) Current Liabilities. Usually Assets need to be grater than liabilities to have positive capital or Working Capital.

• Bank deposits at the Federal Reserve are a liability for the bank. {false}

Bank deposits at the Federal Reserve are a "special kind" of asset. What I mean by that is a requirement by the Federal Reserve to have a deposit in there as a security or collateral but since that deposit is just there. The bank actually can work or make profit out of it.