In a bank balance sheet, loans and advances granted to customers are generally classified under which category?

Introduction / Context:
This question assesses basic understanding of how items are classified in a commercial bank balance sheet. Loans and advances are central to banking operations, and it is essential to know whether they appear as assets or liabilities. Such classification questions are common in banking exams and accounting fundamentals tests.

Given Data / Assumptions:
- The item in question is loans and advances that a bank grants to its customers.
- We refer to the standard format of a bank balance sheet prepared under typical accounting and regulatory guidelines.
- Options include deposits, expenditure, liabilities, and assets, each associated with different sides of the financial statements.

Concept / Approach:
When a bank gives a loan or advance to a customer, the bank expects to receive repayment of principal plus interest in the future. That right to receive money is an economic resource controlled by the bank and is therefore an asset. Deposits, by contrast, are amounts that the bank owes to customers and appear as liabilities. Expenditure refers to expense items in the income statement, not to balance sheet classification.

Step-by-Step Solution:
Step 1: Recall the definition of an asset as a resource controlled by an entity that is expected to provide future economic benefits. Step 2: Recognise that loans and advances will generate interest income and principal repayments for the bank, so they meet this definition. Step 3: Compare this with deposits, which are obligations of the bank to pay depositors and therefore are liabilities. Step 4: Select option D, Assets, because it correctly classifies loans and advances in the bank balance sheet.

Verification / Alternative check:
Look at any published bank annual report or regulatory return. Under the assets side you will find headings such as Advances, Loans and Advances, or Credit to Customers. Under the liabilities side you will see Deposits, Borrowings, and similar obligations. This real world structure confirms that loans and advances appear as assets for the bank, consistent with option D.

Why Other Options Are Wrong:
Option A, Deposits, is a different item representing money customers have placed with the bank, which is owed back to them. Option B, Expenditure, refers to expenses such as salaries and rent in the income statement rather than to balance sheet categories. Option C, Liabilities, is incorrect for loans and advances because the bank does not owe these amounts; instead, customers owe the bank, so the amounts are resources, not obligations.

Common Pitfalls:
A common confusion arises because from the customer perspective a loan is a liability, but from the bank perspective the same contract is an asset. Students sometimes forget to view the transaction from the bank side. Another pitfall is to mix up terminology and think that because deposits and loans are both core banking items, they must be on the same side of the balance sheet, which is not correct.

Final Answer:
The correct choice is Assets.