👨‍🏫 Balance Sheet Must Balance

The Balance Sheet HAS TO Balance

Bank Capital is defined as the difference between the dollar value of assets and the dollar value of liabilities:
$\text{Bank Capital} = A - L$
If we do a little algebra we find that:
$A = L + Bank \;Capital$
We really like this version of the formula because it means that if you add up all of the value of the assets of a bank (on the left-side) of the balance sheet and the Liabilities and Bank Capital (on the right-side), you get the same number. This can be very helpful in problem set questions, exam questions, and other contexts.