Which financial statement summarizes a company's financial position at a specific point in time?

Which financial statement summarizes a company's financial position at a specific point in time?

• A. Income statement
• B. Statement of cash flows
• C. Balance sheet
• D. Statement of retained earnings

Answer: (C)

The balance sheet is the financial statement that provides a snapshot of a company's financial position at a specific point in time. It lists the company’s assets, liabilities, and shareholders' equity, allowing stakeholders to assess the net worth of the company and understand how resources are financed, either through debt or equity. In contrast, the income statement summarizes a company’s revenues and expenses over a period of time, reflecting performance rather than a static financial position. The statement of cash flows focuses on the inflows and outflows of cash over a specific period, illustrating how cash is generated and used. Lastly, the statement of retained earnings outlines changes in retained earnings over a period, showing how profits are either reinvested in the company or distributed as dividends. Thus, the balance sheet is uniquely positioned to represent a company’s standing at a particular moment, hence it is the correct answer.

The balance sheet is the financial statement that provides a snapshot of a company's financial position at a specific point in time. It lists the company’s assets, liabilities, and shareholders' equity, allowing stakeholders to assess the net worth of the company and understand how resources are financed, either through debt or equity.

In contrast, the income statement summarizes a company’s revenues and expenses over a period of time, reflecting performance rather than a static financial position. The statement of cash flows focuses on the inflows and outflows of cash over a specific period, illustrating how cash is generated and used. Lastly, the statement of retained earnings outlines changes in retained earnings over a period, showing how profits are either reinvested in the company or distributed as dividends. Thus, the balance sheet is uniquely positioned to represent a company’s standing at a particular moment, hence it is the correct answer.