What type of account is "Term deposit"?

A term deposit is classified as an asset because it represents a financial resource owned by the individual or entity that has invested funds in it. When someone puts money into a term deposit, they are effectively lending that money to a bank or financial institution for a specified period in exchange for interest earnings. This deposit is expected to generate future economic benefits in the form of interest, making it an asset on the balance sheet.

In contrast, liabilities represent obligations that one owes to others, expenses relate to costs incurred in the operations of a business, and equity reflects the residual interest in the assets after deducting liabilities. Since a term deposit generates income and has value that can be realized in future periods, it is accurately categorized as an asset.