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Learning Objective $03-01$ Describe the purpose of the balance sheet and understand its usefulness and limitations$.$

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The balance sheet is a position statement that presents an organized list of assets, liabilities, and equity at a point in time. The statement does not portray the market value of the entity. However, the information in the statement can be useful in assessing market value, as well as in providing important information about liquidity and long$-$term solvency.

Usefulness and Limitations of the Balance Sheet