Answer:
Whether amounts on the balance sheet meet the definitions of assets and liabilities
Explanation:
The asset/liability approach emphasizes whether amounts on the balance sheet meet the definitions of assets and liabilities. It is a process of managing the use of assets and cash flows to reduce the firm's risk of loss from not paying a liability on time. Well-managed assets and liabilities increase business profits. A contract generates assets and liabilities, and the goal is to depict them in the statement of financial position.
