[Solved] Balance sheet display ____ (MCQ)

Balance sheet display

A. Bank and cash Balances

B. Balances of all individual account

C. Entire summary of the all Transaction

D. Exact financial position of the business on specific date

Answer: Exact financial position of the business on specific date

The Balance Sheet is a financial statement that shows the assets, liabilities and owners equity of a business at a specific date. It gives an exact financial position of the business at that date.

Assets are what the business owns. Assets include: Equipment, Plant & Machinery, Office Furniture, Vehicles and so on.

Liabilities are what the business owes. Liabilities include: Bank loans, Supplier credit, Taxation debts and so on.

Owners Equity is a term used to describe capital invested in the business by owners or shareholders plus retained earnings from previous years.

Balance Sheet

A balance sheet is a financial statement that reports a company’s assets, liabilities and shareholders’ equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders. The balance sheet adheres to the following equation:

Assets = Liabilities + Shareholders’ Equity

The date at which each balance sheet is prepared is called the balance sheet date. This date can vary from company to company and doesn’t need to coincide with the end of a reporting period. However, most companies prepare their balance sheets at regular intervals such as monthly, quarterly or annually.

The Balance Sheet vs. The Income Statement

A common misunderstanding among investors is that revenue reported in an income statement represents cash received during that period. This misunderstanding can lead to errors when trying to compare data from balance sheets and income statements. For example, revenue reported on an income statement for the first quarter of 2015 may not have been collected until 2016, so it won’t appear on the 2015 year-end balance sheet.