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When a bank makes loans out of excess reserves, the money supply increases. That deposit creates two entries on the bank's balance sheet.
What is balance sheet?
A balance sheet is a summary of an individual's or organization's financial balances, whether it is a sole proprietorship, a business partnership, a corporation, a private limited company, or another organization such as the government or a not-for-profit entity.
The balance sheet provides a snapshot of your company's financial position at a particular point in time. A balance sheet, along with an income statement and a cash flow statement, can assist business owners in evaluating their company's financial standing.
The balance sheet's basic equation is Assets = Liabilities + Equity. Analysts should be aware that various assets and liabilities may be measured differently. Some items, for example, are measured at historical cost or a variation thereof, while others are measured at fair value.
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