UPSC Prelims 1999 · General Studies
Question 2: Economy and Social Development
From the balance sheet of a company, it is possible to
AnswerThe answer is (c).
A balance sheet is a statement of a company's assets and liabilities on one particular date. It therefore shows how big the company is in terms of assets and what those assets and liabilities are made of: fixed and current assets, share capital, reserves, loans and amounts owed to creditors. Profit is read from the profit and loss account, and market share does not appear in company accounts at all. Remember: balance sheet shows position, profit and loss account shows performance.
Why each option is right or wrong
- (a) Wrong. Profitability is shown in the profit and loss account; the balance sheet shows only its effect on reserves.
- (b) Wrong. Size can be judged from it, but profitability cannot be assessed from assets and liabilities alone.
- (c) Right. It lists what the company owns and owes, so it shows the size and composition of both.
- (d) Wrong. Market share is not reported in a balance sheet, though debts and assets are.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 1999, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.