Which financial statement shows assets, liabilities, and owner's equity?

Which financial statement shows assets, liabilities, and owner's equity?

• A. Income Statement
• B. Balance Sheet
• C. Cash Flow Statement
• D. Statement of Changes in Equity

Answer: (B)

The balance sheet shows a company’s financial position at a specific date by listing assets, liabilities, and owner's equity in the accounting equation: Assets = Liabilities + Owner's Equity. This structure captures what the company owns, what it owes, and the residual interest of the owners. It’s a snapshot, so you can see how much of the assets are funded by debt versus owners’ investment. The other statements serve different purposes: the income statement covers performance over a period (revenues and expenses, ending with net income), the cash flow statement tracks cash movements over a period, and the statement of changes in equity shows how owners’ equity changes over time. Because of its purpose and structure, the balance sheet is the one that presents assets, liabilities, and owner's equity together.

The balance sheet shows a company’s financial position at a specific date by listing assets, liabilities, and owner's equity in the accounting equation: Assets = Liabilities + Owner's Equity. This structure captures what the company owns, what it owes, and the residual interest of the owners. It’s a snapshot, so you can see how much of the assets are funded by debt versus owners’ investment. The other statements serve different purposes: the income statement covers performance over a period (revenues and expenses, ending with net income), the cash flow statement tracks cash movements over a period, and the statement of changes in equity shows how owners’ equity changes over time. Because of its purpose and structure, the balance sheet is the one that presents assets, liabilities, and owner's equity together.