Question

Financial status of a company at any given time can be analyzed with:

• A. \( \text{Trading account} \)
• B. \( \text{Profit and Loss statement} \)
• C. \( \text{Balance Sheet} \)
• D. \( \text{Cash Book} \)

Hint:

A balance sheet follows the fundamental accounting equation: Assets = Liabilities + Shareholder's Equity.

Answer 1

The Correct Option is C

A balance sheet provides a snapshot of a company’s financial condition, including assets, liabilities, and shareholders' equity. It reflects financial stability and liquidity, aiding stakeholders in decision-making. Unlike a profit and loss statement, which shows earnings over a period, the balance sheet captures financial data at a specific moment.