The purpose of the balance sheet is:
A) to list the assets of the business and the claims against the assets at a particular point of time.
B) to determine the cash inflows and outflows over a period of time.
C) to determine the profit earned over a period of time.
D) all of the above.

Question

Quizplus · Accepted Answer

The balance sheet is a statement of the financial position of a business at a particular point in time. It lists the assets of the business and the claims against those assets by creditors and owners. The purpose of the balance sheet is to provide a snapshot of the financial health of the business and to show its liquidity and solvency. Choices B and C refer to the cash flow statement and income statement, respectively, which have different purposes than the balance sheet.

The Purpose of the Balance Sheet Is