Which of the following describes the primary objective of the balance sheet?
Posted: Sat Aug 07, 2021 6:40 am
A) To measure the net income of a business up to a particular point in time.
B) To report the difference between cash inflows and cash outflows for the period.
C) To report the financial position of the reporting entity at a particular point in time.
D) To report the market value of assets, liabilities, and stockholders' equity at a particular point
in time.
Answer: C
Explanation: The balance sheet reports the amount of assets, liabilities, and stockholders' equity
(financial position) of an accounting entity at a particular point in time. These positions are
reported at historical cost, not market value.
B) To report the difference between cash inflows and cash outflows for the period.
C) To report the financial position of the reporting entity at a particular point in time.
D) To report the market value of assets, liabilities, and stockholders' equity at a particular point
in time.
Answer: C
Explanation: The balance sheet reports the amount of assets, liabilities, and stockholders' equity
(financial position) of an accounting entity at a particular point in time. These positions are
reported at historical cost, not market value.