Financial Statement Showing Company Indebtedness
Question:
Which financial statement best reveals to investors and creditors information about a company’s indebtedness?
A) Statement of cash flows
B) Income statement
C) Balance sheet
D) Statement of stockholders’ equity
Answer:
C) Balance sheet
Explanation: The balance sheet is the financial statement that best reveals information about a company’s indebtedness. It provides a snapshot of the company’s financial position at a specific point in time, detailing assets, liabilities, and equity. Investors and creditors can assess the company’s debt and financial health level by reviewing the liabilities section of the balance sheet.
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