ITPEC FE Morning October 2023 Question 79
Which of the following is the type of financial statement that shows a company’s assets, liabilities, and shareholders’ equity at a particular point of time?
Explanation
Balance sheet — it lists assets, liabilities and shareholders' equity as of one date, a snapshot of the financial position.
The balance sheet is drawn up as of a closing date and always balances: assets = liabilities + shareholders' equity. Assets show how the funds are used; liabilities and equity show where they came from. It is the only one of the four statements that describes a single point in time; the others cover a period.
Answer (a)
Why not others:
- •(b) Statement of cash flows — cash coming in and going out over a period, split into operating, investing and financing activities
- •(c) Statement of changes in equity — how each item of shareholders' equity changed during the period
- •(d) Statement of profit or loss — revenue, expenses and profit over a period: operating results, not financial position
Key rule: A point in time means the balance sheet; a period means the profit or loss statement, the cash flow statement or the statement of changes in equity.
Corporate Activities · AI-written, may contain errors
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