On which financial statement does a business list the building in which it does business?

• A. Statement of Retained Earnings
• B. Income Statement
• C. Balance Sheet
• D. Statement of Cash Flows

Answer: (C)

Verified step by step guidance

1. Understand the purpose of each financial statement: The Balance Sheet reports a company's assets, liabilities, and equity at a specific point in time. The Income Statement shows revenues and expenses over a period. The Statement of Retained Earnings explains changes in retained earnings. The Statement of Cash Flows details cash inflows and outflows.
2. Identify the nature of the item in question: A building is a long-term asset because it is a physical resource owned by the business that provides future economic benefits.
3. Determine where long-term assets are reported: Long-term assets, such as buildings, are listed under the 'Assets' section of the Balance Sheet.
4. Eliminate other options: The Income Statement does not report assets; it focuses on revenues and expenses. The Statement of Retained Earnings tracks changes in retained earnings, not physical assets. The Statement of Cash Flows reports cash transactions, not the value of assets like buildings.
5. Conclude that the building is listed on the Balance Sheet under the 'Assets' section, typically categorized as 'Property, Plant, and Equipment (PP&E)'.