Question

Which of the following is a characteristic of a balance sheet?

1) It shows the financial position of a company at a specific point in time.
2) It includes assets, liabilities, and equity.
3) It is prepared annually.
4) It provides information about a company's profitability.

Answer 1

The balance sheet is an account statement which represents a company's financial position at a specific point in time, detailing assets, liabilities, and equity, and usually prepared annually.

Step-by-step explanation:

A characteristic of a balance sheet is that it shows the financial position of a company at a specific point in time. The balance sheet includes assets, such as cash and real estate; liabilities, like mortgages and other debts; and equity, which is the net worth calculated as assets minus liabilities. Unlike the income statement, which reflects the company's profitability over a period, the balance sheet provides a snapshot of the company's financial status at one point in time and is usually prepared annually, although it can be generated more frequently for management purposes.