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The primary function of the Balance Sheet is to:?

 A) Measure the company's performance over a period of time

 B) Make sure that the company's assets and the company's liabilities "balance" 

C) Determine taxes owed or not owed

 D)  Show the company's value as of a given point in time

 E) Determine if the company will have enough cash to operate properly

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Question added by Adam Adam , Senior HR Specialist , Fawaz Al Otaibi Co
Date Posted: 2015/10/26
Adam Adam
by Adam Adam , Senior HR Specialist , Fawaz Al Otaibi Co

The correct answer is (D)

because a balance sheet shows your business’s assets, liabilities and shareholder equity at a specific moment.

Creditors and interested stock investors use the balance sheet to determine a company's financial standing (value) because it lists what a company owns and what it owes. Thus, the balance sheet shows the company's value as of a given point in time.

Duncan Robertson
by Duncan Robertson , Strategy Consultant , Duncan Robertson Consultancy

Errr ... none of these. 

It is simply a statement of the company's assets and liabilities, at the close of business on the stated day, according to the chosen accounting standards.

The "balance" part is basically a type of "checksum" that is part of commonly accepted accounting standards - it really just makes it easier to spot a mistake.

The company's "value" is given by its stock market valuation, not by the balance sheet.

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