In financial accounting, the balance sheet primarily reports which type of accounts at a specific point in time?

• A. Only accounts related to sales and cost of goods sold
• B. Only cash flow accounts such as cash received and cash paid
• C. Permanent (real) accounts such as assets, liabilities, and stockholders’ equity
• D. Temporary (nominal) accounts such as revenues and expenses

Answer: (C)

Verified step by step guidance

1. Understand that the balance sheet is a financial statement that reports a company's financial position at a specific point in time.
2. Recall that accounts on the balance sheet are classified as permanent (real) accounts, which include assets, liabilities, and stockholders' equity.
3. Recognize that temporary (nominal) accounts, such as revenues and expenses, are reported on the income statement and are closed at the end of the accounting period.
4. Note that cash flow accounts, like cash received and cash paid, are reported in the statement of cash flows, not the balance sheet.
5. Conclude that the balance sheet primarily reports permanent accounts because these accounts carry their balances forward to the next accounting period, reflecting ongoing financial position.