A strong statement of financial position shows:
A)Large amounts of liquid assets relative to the liabilities due in the near future.
B)Large amounts of debt relative to stockholders' equity.
C)That cash is being generated by operations.
D)That profits are being generated by operations.

Question

Quizplus · Accepted Answer

A strong statement of financial position indicates that the company has sufficient liquidity to meet its upcoming liabilities. This means having large amounts of liquid assets relative to the liabilities due in the near future, which would boost investor confidence in the company's ability to meet its obligations. The other options, B, C, and D, may be indicators of financial strength, but they do not necessarily reflect a strong statement of financial position.

A Strong Statement of Financial Position Shows