Florida Building Contractor Business/Finance Practice Exam

Which document represents a company's financial position at a specific date?

1. Income statement

2. Balance sheet

3. Cash flow statement

4. Statement of stockholders' equity

The correct answer is: Balance sheet

The balance sheet is the document that represents a company's financial position at a specific date. It provides a snapshot of what the company owns (assets), what it owes (liabilities), and the residual interest of the owners (equity) at that particular moment in time. This information is essential for stakeholders to assess the liquidity, financial stability, and overall health of the business. In contrast, the income statement details the company’s revenues and expenses over a period, reflecting performance but not providing a specific point in time. The cash flow statement tracks the inflow and outflow of cash over a period, illustrating how cash is generated and used, rather than presenting a static position. The statement of stockholders' equity explains changes in equity accounts over a period and encapsulates factors contributing to the overall balance of the equity section on the balance sheet rather than a direct snapshot of financial position. Therefore, the balance sheet is the correct answer as it specifically focuses on the company’s status at a given date.