Question

The balance sheet format listing liabilities and stockholders' equity directly below assets is called the:

A. Financial position form
B. Solvency form
C. Account form
D. Report form

Answer 1

The balance sheet format with liabilities and stockholders' equity listed below assets is known as the report form. This format portrays the company's financial position on a single page, different from the T-account or account form, which uses a two-column approach.

Step-by-step explanation:

The balance sheet format listing liabilities and stockholders' equity directly below assets is called the report form. In contrast to the T-account or account form, which presents assets on one side and liabilities and equity on the other, the report form lists everything in a top-down sequence on a single page. This makes it similar to the typical way a company would report its financial position, hence the name.

A bank's balance sheet is a practical example of the application of a balance sheet, where assets, liabilities, and bank capital are clearly delineated. The bank's assets, like cash in vaults or loans made to customers, are matched against liabilities such as customer deposits or debt, to calculate the net worth or bank capital.