Which of the following statements about a balance sheet is NOT true?
A) A balance sheet directly states how management has performed in using assets to earn profits.
B) Good profit performance is reflected by increased assets and retained profits.
C) A balance sheet provides a useful picture of the state of the company.
D) Many outsiders use the balance sheet to evaluate the quality of management's decisions on obtaining,deploying and financing assets.

Question

Quizplus · Accepted Answer

A balance sheet does not directly state how management has performed in using assets to earn profits. It provides a snapshot of the company's financial position at a specific point in time, including assets, liabilities, and equity. Profit performance can be indirectly inferred from the balance sheet by analyzing changes in assets and retained earnings over time, but it is not a direct statement on management's performance.

Which of the Following Statements About a Balance Sheet Is