Question

Which financial statement would best indicate whether the company relies on debt or stockholders' equity to finance its assets?

A. Statement of cash flows
B. Retained earnings statement
C. Balance sheet
D. Income statement

Answer 1

Answer:

C. Balance sheet

Explanation:

The balance sheet shows the actual position of the business organization with respect to the total assets, total liabilities, and the stockholder equity

Although, the accounting equation is  the most important element to balanced the balance sheet which is shown below:

Total assets = Total liabilities + Stockholder equity

It analyzes the financial position, performance of the company so that proper interpretation could be made

Therefore by considering the balance sheet, the company could finance its assets