Which financial statement reports an organization's financial position at a single point in time?

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

Answer: (D)

Verified step by step guidance

1. Understand the purpose of each financial statement: The Statement of Cash Flows shows cash inflows and outflows over a period of time, the Income Statement reports revenues and expenses over a period of time, and the Statement of Retained Earnings explains changes in retained earnings over a period of time. The Balance Sheet, however, reports the financial position of an organization at a specific point in time.
2. Recognize that the Balance Sheet provides a snapshot of the company's assets, liabilities, and equity as of a specific date. This is why it is referred to as a 'point-in-time' financial statement.
3. Recall the accounting equation that underpins the Balance Sheet: Assets = Liabilities + Equity. This equation ensures that the financial position is balanced and accurately reflects the organization's resources and obligations.
4. Identify the key components of the Balance Sheet: Assets (e.g., cash, accounts receivable, inventory), Liabilities (e.g., accounts payable, loans), and Equity (e.g., common stock, retained earnings). These components collectively represent the organization's financial position.
5. Conclude that the Balance Sheet is the correct answer because it uniquely reports the financial position of an organization at a single point in time, unlike the other financial statements that cover a period of time.