Which of the following best describes a balance sheet?

• A. A financial statement that reports revenues minus expenses to determine net income over a period of time.
• B. A financial statement that reports cash inflows and outflows from operating, investing, and financing activities over a period of time.
• C. A financial statement that reports a company’s assets, liabilities, and stockholders’ equity at a specific point in time.
• D. A financial statement that reports changes in stockholders’ equity (e.g., issuance of stock, dividends, and retained earnings) over a period of time.

Answer: (C)

Verified step by step guidance

1. Understand that a balance sheet is one of the primary financial statements used in accounting.
2. Recognize that the balance sheet provides a snapshot of a company's financial position at a specific point in time, unlike other statements that cover a period.
3. Identify the three main components reported on the balance sheet: assets, liabilities, and stockholders' equity.
4. Recall that assets represent what the company owns, liabilities represent what the company owes, and stockholders' equity represents the owners' residual interest in the company.
5. Conclude that the balance sheet differs from the income statement, cash flow statement, and statement of stockholders' equity, which report financial information over a period of time rather than at a single point.