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

Financial position is ascertained from the Balance Sheet, so the answer is option (c).

Understanding the terms

• Financial position answers the question: what does the business own (assets) and what does it owe (liabilities and capital) on a particular date?
• The Balance Sheet is a statement of assets and liabilities prepared at the end of the accounting period. It is not an account; it is a snapshot on a fixed date.

Why the other options are wrong

• (a) Journal and (d) Ledger only record and classify transactions; they do not by themselves show the overall position. …