Which of the following is objective of preparation of balance sheet?

To show financial position of a firm

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To shows the nature and value of assets, the nature of value of liabilities and the position of capital

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(A) or (B)

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(A) and (B)

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Solution

The correct option is D (A) and (B)
Balance Sheet lists all the assets and liabilities of business. It shows the financial position of the firm at the end of an accounting period. Owner's Equity is also included in the balance sheet. This statement prove the accounting formula "Assets= Liabilities+Owner's Equity."

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