CSLB Law & Business ExamBusiness FinancesEasy
A contractor wants to see the company's total assets, liabilities, and net worth as of December 31. Which financial statement should be reviewed?
- ABalance sheet
- BJob cost report
- CCash flow statement
- DIncome statement
Show answer & explanationAnswer & explanation
Correct answer: A. Balance sheet
A balance sheet is a snapshot of a company's financial position at a specific point in time, listing assets, liabilities, and owner's equity (net worth). The income statement covers a period of time, not a single date.
Why the other options are wrong
- B. Tracks costs on individual jobs, not overall company position.
- C. Tracks cash inflows/outflows over a period, not net worth.
- D. Shows profit/loss over a period, not a point-in-time snapshot.
Balance Sheet
A financial statement showing a company's assets, liabilities, and net worth (equity) at a single point in time.
- Formula: Assets = Liabilities + Equity
- Snapshot, not a period report
- Used to assess company solvency and net worth
Memory trick: Balance sheet = a photo; income statement = a movie.