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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 Auditorโ€™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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