Final answer:
Profit from a business is reported on the balance sheet under net worth or shareholders' equity, not under assets. This statement is false. The balance sheet includes assets, liabilities, and equity, showing the company's financial position at a specific time.
Step-by-step explanation:
The profit from a business is not included on the balance sheet under the assets section; this statement is false. The balance sheet reflects a company's financial position at a specific point in time, and it is organized into two key sections: assets and liabilities plus shareholders' equity.
Assets are resources owned by the company, such as cash, inventory, and property. Liabilities are what the company owes to others, including debts and obligations. The difference between the total assets and total liabilities is known as net worth or shareholders' equity, and this is where the profit is indirectly reflected, since retained earnings are part of the shareholders' equity.
In conclusion, while a firm's assets on the balance sheet include valuable items like financial instruments or reserves, the profit generated is actually included in the net worth or shareholders' equity, which is a separate section from the assets.
The money listed under assets on a bank's balance sheet may not all be physically present in the bank because banks engage in fractional reserve banking, lending out a portion of the deposits while keeping some reserves.