The balance sheet is a snapshot of a company's current financial situation. On its alone, it is unable to convey trends that have been unfolding over an extended period of time. Because of this, the balance sheet should be compared to the preceding period's financial statements. Balance sheets should also be compared to those of other firms in the same sector, as each industry has its own unique financing methods.
Definition of Balance Sheet
At any one point in time, a company's assets, liabilities, and shareholder equity are all shown on its balance sheet. Capital structure evaluation and rate of return calculations are based on the company's balance sheet information
In short, A balance sheet shows the assets and liabilities of a corporation, as well as the amount of money invested by shareholders. Fundamental analysis and the computation of financial ratios can be carried out using balance sheets in conjunction with other relevant financial documents.
The Balance Sheet equation
Assets = Liabilities + Shareholders’ Equity
You can see how this formula works right away. This is because a business must pay for everything it has (assets) either by borrowing money (taking on liabilities) or by receiving money from investors (issuing shareholder equity).
Significance of a Balance Sheet
Executives, investors, analysts, and regulators all evaluate the balance sheet to gauge a company's present financial health. It is commonly used in conjunction with the income statement and the cash flow statement. The assets and liabilities of a corporation may be quickly and easily seen on a balance sheet. A firm's net worth, cash on hand, and short-term assets may all be found on the balance sheet, as can information on how heavily leveraged the company is compared to its competitors.
Following are some of the multiple choice questions on the Balance Sheet with answers that will help the students in developing their knowledge.
Balance Sheet MCQ
1. What is the name given to the owner's or proprietor's account in the business?
2. What is another name for Statement of Financial Position?
3. Select the item which is not a component of a balance sheet.
4. How do we calculate Total Assets?
5. Which of these does a balance sheet show
6. On a balance sheet, if total assets are $15,000 and Total Liabilities are $10,000. Owner's Equity will equal:
7. Which of these is an asset?
8. Which of the following is a liability?
9. Which of the following is a Non current asset?
10. Which of these does not appear on a balance sheet?
11. What is the name given for all the resources owned by the business?
12. Which of the following is not an example of Non-current Asset.
13. Which of the following is not an example of a current asset?
14. Which of the following is a current asset?
15. Which of the following is a current liability?
16. Accounts Payable is listed asA = AssetsL = LiabilitySE = Stockholders Equity
17. Cash is listed asA = AssetsL = LiabilitySE = Stockholders Equity
18. Land is listed asA = AssetsL = LiabilitySE = Stockholders Equity
19. The Statement of Financial Position consist of three main accounts which are :
20. Examples of assets include:
21. Which accounts are needed to prepare the Statement of Financial Position?
22. Examples of Liabilities include which of the following:
23. Zero net worth is defined as:
24. Accounts Receivable is a:
25. Choose the effect of the transaction:Owner withdrew $50 for his vacation
26. Choose the effect of the transaction:Transferred cash $50 to business's bank account
27. Choose the effect of the transaction:Paid the trade payable by check $50.
28. Choose the effect of the transaction:Withdrew cheque for business' use $50.
29. Choose the effect of the transaction:Bought office supplies by cash $5.
30. Choose the effect of the transaction:Owner withdrew cheque $5 for birthday party for his son.
31. Choose the effect of the transaction:Purchased $50 worth of equipment on account
32. Choose the effect of the transaction:Sold the furniture by cash $5.
33. Choose the effect of the transaction: The owner started a business and invested his cash $50 and an Equipment $50 with a trade payable of $5.00
34. Choose the effect of the transaction:Acquired a company car by cheque $50000
35. Choose the effect of the transaction:Received $50 from a customer in the business' receivable.
36. Choose the effect of the transaction:Borrowed $50 from the bank
37. Choose the effect of the transaction:Incurred a bank overdraft of $5.00 in using the bank account of the business.
38. Choose the effect of the transaction:Sold equipment by cash worth $1000
39. Choose the effect of the transaction:Purchased equipment on credit.
40. A balance sheet has four sections: 1)heading 2)assets 3) liabilities and 4)
41. Assets=Liabilities + Capital (True or False)
42. Buildings and Equipment is listed asA = AssetsL = LiabilitySE = Stockholders Equity
46. Non current liability are financial obligations that are due for settlement within 1 year. True or False
47. Current Assets are cash or other assets that are expected to be converted to cash within a year
48. Which of the following is considered a liability?
49. Which of the following is considered an asset?
50. Net Worth if equal to:
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