Question

Marin Company has decided to expand its operations. The bookkeeper recently completed the following balance sheet in order to obtain additional funds for expansion. What is the purpose of completing the balance sheet?

1) To calculate the company's net income
2) To determine the company's financial position
3) To track the company's cash flow
4) To evaluate the company's profitability

Answer 1

The completion of a balance sheet is to determine the company's financial position by providing a snapshot of assets, liabilities, and shareholders' equity.

Step-by-step explanation:

The purpose of completing a balance sheet for Marin Company, which is looking to expand its operations and seeking additional funds, is primarily to determine the company's financial position (option 2).

A balance sheet is a financial statement that lists the company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of what the company owns and owes, as well as the amount invested by the shareholders.

It does not directly calculate net income, track cash flow, or evaluate profitability; those aspects are covered by other financial statements such as the income statement and cash flow statement.