Question

What does a balance sheet show?

Short answer

Through balance sheet, stakeholders can judge their health and wealth of the business. So, the stakeholders can make the decision in order to avoid the speculation risk in the business. The balance sheet also tells us the profitable investments during the year. On the basis of balance sheet, certain types of policies were made and modified further.

Step-by-step solution

 Concept Introduction

Balance sheet is defined as the monetary reports of all assets and liabilities of the company. It helps to judge the financial condition and positive of the companies at the end of the every financial year. It explains the details of the expenses and the income made during the ongoing financial year.

:Expalanation of solution

With the help of the balance sheet, the investors came to know about the amount they have debited and credited during the time. With the help of this, they can reduce their liabilities and increase the assets. These types of certain changes were made in order to make the next year's balance sheet more efficient.

Through balance sheet, stakeholders can judge their health and wealth of the business. So, the stakeholders can make the decision in order to avoid the speculation risk in the business. The balance sheet also tells us the profitable investments during the year. On the basis of balance sheet, certain types of policies were made and modified further.