The balance sheet contributes to financial reporting by providing a basis for all of the following except
A) computing rates of return.
B) evaluating the capital structure of the enterprise.
C) determining the increase in cash due to operations.
D) assessing the liquidity and financial flexibility of the enterprise.

Question

Quizplus · Accepted Answer

The balance sheet provides information about the financial position of an enterprise at a specific date. It shows the assets, liabilities, and equity of the enterprise. The balance sheet helps in evaluating the capital structure of the enterprise, assessing the liquidity and financial flexibility of the enterprise, and computing rates of return. However, it does not provide information about the increase in cash due to operations. This information can be obtained from the statement of cash flows.

The Balance Sheet Contributes to Financial Reporting by Providing a Basis