Question

Which of the following statements about the balance sheet are true? (Select all that apply.) Check All That Apply A classified balance sheet to provide useful information about liquidity and long-term solvency. A classified balance sheet to provide useful information about liquidity and long-term solvency. Liquidity refers to an assessment of whether a company will be able to pay all its liabilities. Liquidity refers to an assessment of whether a company will be able to pay all its liabilities. Although many valuable resources are not recorded as assets in the balance sheet, these resources are reflected in the company’s book value. Although many valuable resources are not recorded as assets in the balance sheet, these resources are reflected in the company’s book value. The less financial flexibility, the more risk there is that an enterprise will fail. The less financial flexibility, the more risk there is that an enterprise will fail.

Answer 1

Answer:

These two answer choices are true:

A classified balance sheet to provide useful information about liquidity and long-term solvency.

A classified balanche sheet lists assets in order of liquidity, and liabilities according to the dates in which they are due. This information is useful to obtain liquidity ratios like the quick ratio or the current ratio, which are helpful to determine the company's liquidity and solvency.

Liquidity refers to an assessment of whether a company will be able to pay all its liabilities.

When a company has a good level of liquidity, it means that it has many assets that are cash, or that can be converted into cash quickly, in order to pay for outstanding debt. A company with a good amount of liquidity is a healthy company.