In financial accounting, how often should a company prepare a balance sheet?

• A. Only when the company applies for a loan or seeks outside investors
• B. Only once per year, regardless of the company’s reporting needs
• C. At the end of each accounting period (e.g., monthly, quarterly, and at year-end), or whenever financial statements are prepared
• D. Only when the company has positive net income for the period

Answer: (C)

Verified step by step guidance

1. Understand that a balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity.
2. Recognize that companies prepare balance sheets regularly to provide timely and relevant financial information to stakeholders, which helps in decision-making.
3. Identify that the frequency of preparing a balance sheet depends on the accounting periods established by the company, which can be monthly, quarterly, or annually.
4. Note that balance sheets are prepared at the end of each accounting period or whenever financial statements are required, not only when applying for loans or when net income is positive.
5. Conclude that the best practice is to prepare a balance sheet at the end of each accounting period to ensure accurate and up-to-date financial reporting.