A balance sheet is a snapshot of a business's financial condition at a specific moment in time. It shows the assets a business owns, the liabilities it owes, and the owner's equity in the business. It does not track cash inflows or outflows or attempt to identify future cash flows, nor does it examine profitability over a period of time.

Solved

A Balance Sheet

Question 32

Multiple Choice

A balance sheet:

A) examines a business's assets, liabilities, and owner's equity at some particular point in time.
B) attempts to identify cash flows into a firm and cash flows from a firm for some future period.
C) examines the reinvested income in a business and which has not been paid out to shareholders as dividends.
D) examines the overall profitability of a firm over a particular period of time.
E) examines cash inflows and cash outflows for a business during a specified period of time.

Correct Answer: