ITPEC FE Morning April 2019 Question 78
ITPEC FE Morning April 2019 — Question 78 of 80
Balance Sheet — a snapshot of a company's financial position at a specific point in time
The balance sheet reports three things: assets, liabilities, and net assets (equity), following the fundamental equation: Assets = Liabilities + Equity. It captures the financial situation at a specific date, not over a period.
The correct answer is a) Balance sheet.
Why not the others:
- b) Cash flow statement — tracks inflows and outflows of cash over a period, not a point-in-time snapshot
- c) Income statement — reports revenues and expenses over a period to show profit or loss
- d) Statements of shareholders' equity — shows changes in equity over a period
Key rule: If the question mentions "assets, liabilities, and net assets" + "at a certain point of time" → it's always the balance sheet. The other three financial statements all describe changes over a period.
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