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    Question

    Which financial statement helps in assessing liquidity

    and solvency?
    A Statement of profit and loss only Correct Answer Incorrect Answer
    B Balance sheet and cash flow statement Correct Answer Incorrect Answer
    C Statement of changes in equity only Correct Answer Incorrect Answer
    D Notes to accounts only Correct Answer Incorrect Answer
    E Auditor’s report only Correct Answer Incorrect Answer

    Solution

    Balance sheet shows solvency at a point; cash flow shows liquidity over period.

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