The main purpose of balance sheet is to show ______a)Assets and Capitalb)Creditorsc)Financial Positiond)Old Accounting RecordsCorrect answer is option 'C'. Can you explain this answer?

Question

Answer

The main purpose of balance sheet is to show financial position of the business because it shows the liquidity and creditworthiness of the business.

Answer

Financial position of the firm as it has all the assets n liability of the firm thus depicting its position

Answer

Correct answer is C..Balance Sheet show financial position of business that how much money or assets a business have and how much the business have to pay to creditors, partners etc at the end of the year...

Answer

Assets and capital..

Answer

**Explanation:**

The main purpose of a balance sheet is to show the financial position of a business at a specific point in time. It provides a snapshot of the company's assets, liabilities, and shareholders' equity. The balance sheet is an essential financial statement that helps stakeholders, such as investors, creditors, and management, assess the financial health and stability of the business.

**Assets and Liabilities:**

One of the primary functions of a balance sheet is to present the company's assets and liabilities. Assets represent the resources owned by the company, such as cash, accounts receivable, inventory, property, plant, and equipment. Liabilities, on the other hand, represent the company's obligations or debts, such as accounts payable, loans, and accrued expenses. The balance sheet shows the total value of assets and liabilities, providing a clear picture of what the company owns and owes.

**Financial Position:**

The balance sheet is crucial in determining the financial position of a company. By comparing the total assets with the total liabilities, stakeholders can evaluate the company's solvency and liquidity. If the assets exceed the liabilities, it indicates a positive financial position, demonstrating that the company has enough resources to cover its obligations. Conversely, if the liabilities outweigh the assets, it may indicate financial distress and potential insolvency.

**Equity and Ownership:**

In addition to assets and liabilities, the balance sheet also includes shareholders' equity or owner's equity. This represents the ownership interest in the company and is calculated by subtracting total liabilities from total assets. Shareholders' equity reflects the residual interest in the assets after deducting liabilities, and it represents the shareholders' claim on the company's assets. It provides insights into the company's financial stability and the value of the shareholders' investment.

**Assessing Performance:**

By analyzing balance sheets over multiple periods, stakeholders can assess the company's financial performance and track its progress. Changes in assets, liabilities, and equity over time can reveal trends and patterns, providing valuable information about the company's growth, profitability, and financial stability.

**Conclusion:**

In summary, the main purpose of a balance sheet is to show the financial position of a business by presenting its assets, liabilities, and shareholders' equity. It serves as a vital tool for stakeholders to assess the company's solvency, liquidity, financial stability, and performance.

Answer

It shows financial position pf buisness and it is proof og accounting records.

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