The balance sheet identifies the productive resources (assets) that a firm uses to generate income, as well as the sources of funding from creditors (liabilities) and owners (shareholders' equity) that were used to buy the assets. A) TrueB) False

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Business

Killian Finley

23 June, 13:23

The balance sheet identifies the productive resources (assets) that a firm uses to generate income, as well as the sources of funding from creditors (liabilities) and owners (shareholders' equity) that were used to buy the assets. A) TrueB) False

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Answers (1)

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Maxim Cain · Answer 1

A) True

Explanation:

The Balance Sheet is a snapshot of the financial situation of a company at the end of the accountable period. It shows which productive resources (assets) the company has for the development of its activities and how they are financed. Assets can be financed by external (Obligation with creditors - Liabilities) or internal sources (Issuing equity shares - Shareholders' equity). As every Asset must be financed either or both with Liabilities or Shareholders' equity, in the Balance Sheet, the accountable equation is represented.