1.

What is the objective of the balance sheet?

Answer»

It gives information about the current financial condition of the BUSINESS.

  • It gives a broad picture of the VALUE of the assets like accounts receivable, inventory and FIXED assets, cash balances, etc.
  • It displays the amount of debt the business owes to all the creditors
  • It also measures the solvency of any business. The business is REGARDED as a SOLVENT when the assets exceed the business liabilities.
  • It also shows whether the business is over-trading or under-trading


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