Question

Which of the following describes the information reported in the balance sheet?

a.Net income for the period is calculated by subtracting expenses from revenues.
b.Total assets equal total liabilities plus stockholders' equity.
c.Changes in stockholders' equity are shown through changes in common stock and retained earnings.
d.All accounts and account balances are shown and all debits equal all credits.

Answer 1

b.Total assets equal total liabilities plus stockholders' equity.

Answer 2

The balance sheet reports a company's financial position by listing assets, liabilities, and stockholders' equity, following the equation where total assets equal total liabilities plus stockholders' equity.

Step-by-step explanation:

The information reported in the balance sheet primarily involves a company's financial position at a specific point in time, showing its assets, liabilities, and stockholders' equity. The correct statement that describes the information in a balance sheet would be 'b. Total assets equal total liabilities plus stockholders' equity.' This fundamental accounting equation ensures the balance sheet is always balanced with assets on one side and the sum of liabilities and stockholders' equity on the other. Assets include things like cash, inventory, and buildings, while liabilities cover debts like loans and accounts payable. The stockholders' equity represents the owners' residual interest in the entity and includes items like common stock and retained earnings.