Final answer:
A parenthetical explanation is used to show a direct relationship between an asset and a liability on the balance sheet.
Step-by-step explanation:
Companies use a parenthetical explanation to show a direct relationship between an asset and a liability on the balance sheet. A parenthetical explanation is a note that provides additional information or clarification about an item presented on the balance sheet. It is typically enclosed in parentheses and placed next to the related line item. For example, if a company has an asset called 'Accounts Receivable' and a related liability called 'Customer Deposits,' a parenthetical explanation could be used to indicate that the accounts receivable balance represents amounts owed by customers who have made deposits.