Florida Building Contractor Business/Finance Practice Exam

Which financial statement provides a snapshot of a company's assets, liabilities, and equity at a specific point in time?

1. Income Statement

2. Cash Flow Statement

3. Balance Sheet

4. Statement of Changes in Equity

The correct answer is: Balance Sheet

The balance sheet is the financial statement that offers a snapshot of a company's assets, liabilities, and equity at a specific point in time. It provides a comprehensive view of what a company owns (assets), what it owes (liabilities), and the residual interest of the owners (equity). This information is crucial for stakeholders as it reflects the financial position of the business on a given date, allowing for assessments of liquidity, financial stability, and overall health. The income statement focuses on the company’s revenues and expenses over a period, showcasing its performance rather than its financial position at a single moment. The cash flow statement, on the other hand, tracks the flow of cash in and out of the business over a period of time, detailing how well the company generates cash to fund its operating expenses and pay debts. Lastly, the statement of changes in equity outlines the movement in equity accounts over a specific period, detailing contributions, withdrawals, and other factors that change equity but does not provide the complete picture of assets and liabilities at a particular point.