Q.Financial position of a business is ascertained on the basis of :

Financial position is judged from the assets and liabilities, which are shown in the Balance Sheet, so the correct answer is option (a).

The two objectives of final accounts differ:

• The Trading and Profit & Loss account shows the profitability (result of operations) for a period.
• The Balance Sheet is a statement of assets and liabilities on a particular date and reveals the financial position of the business. …