CSLB Contractor's Law & Business Practice Exam 2025 – All-in-One Resource for Exam Success!

Question: 1 / 400

What is a balance sheet primarily used to assess?

Profitability

Cash flow

Financial position

A balance sheet is primarily used to assess a company's financial position at a specific point in time. It provides a snapshot of the business's assets, liabilities, and equity, allowing stakeholders to understand what the company owns and owes. By evaluating this information, one can determine the company's net worth and how well it can meet its obligations, giving insight into its overall financial health.

Profitability, cash flow, and revenue generation are important aspects of a business's financial performance, but these are typically analyzed through other financial statements, such as the income statement and cash flow statement. While these statements offer valuable information about the company's operations and performance over a period, the balance sheet specifically highlights the financial position of the company, making it the correct choice in this context.

Get further explanation with Examzify DeepDiveBeta

Revenue generation

Next Question

Report this question

Download CSLB Contractor's Law & Business Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy