Question

Which of the following statements is correct? A) The difference between the total assets reported on the balance sheet and the debts reported on the statement tells us the current market value of the stockholders equity, assuming the statements are prepared in accordance with generally accepted accounting principles (GAAP). O B) The balance sheet for a given year, say 2005, is designed to give us an idea of what happened to the firm during that year. OC) A typical industrial company's balance sheet lists the firm's most liquid assets first, and then goes on down to the longest-lived assets. D) For most companies, the market value of the stock is listed on right-hand side of the the balance sheet.

Answer 1

The correct statement is :-

(C) A typical industrial company's balance sheet lists the firm's most liquid assets first , and then goes on down to the longest lived asset .

Explanation :-

Company 's balance sheet lists liquid assets and current assets first , then the fixed asset .

Normally , a company's balance sheet lists cash & cash equivalents first on the asset side of tge balance sheet which is the liquid asset .

Explanation for rejection of other points :-

(A) the difference between total asset reported on balace sheet and debts on the balance sheet tell us the book value of the equity , not the market value of stockholders equity.

(B) The balance sheet for a given year does not tell us about what happened to company in the year because balance sheet tells about the financial position of the company .

(D) is also wrong as market value of stock is not listed on balance sheet because book value of stock is listed on balance sheet.