The primary purpose of the balance sheet is to:
A) Report the current value of the business.
B) Measure the net income of a business up to a particular point in time.
C) Report the difference between cash inflows and cash outflows for the period.
D) Report the financial position of the reporting entity at a particular point in time.

Question

The primary purpose of the balance sheet is to: 
A) Report the current value of the business.
B) Measure the net income of a business up to a particular point in time.
C) Report the difference between cash inflows and cash outflows for the period.
D) Report the financial position of the reporting entity at a particular point in time.

Quizplus · Accepted Answer

The primary purpose of the balance sheet is to report the financial position of the reporting entity at a particular point in time. It presents a snapshot of the organization's assets, liabilities, and equity. The balance sheet does not measure net income or report cash inflows and outflows. It also does not report the current value of the business, as the value can fluctuate over time.

The Primary Purpose of the Balance Sheet Is To