What is a picture of an organization’s financial situation on a specific day (usually the last day of the accounting period)?
A. Profit and loss statement (P&L)
B. Statement of cash flows
C. Product placement
D. Balance sheet
Answer: D – The balance sheet is a general picture of an organization’s financial situation on a specific day (usually the last day of the accounting period).
Explanation: The balance sheet can be a very useful tool for summarizing financial information and the result of normal business activity. Typical types of information on the organization’s balance sheet are the company’s assets, liabilities, and equity.
The basic balance sheet formula is: Assets = Liabilities + Equity
