What is a balance sheet?

A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It details the company’s assets, liabilities, and shareholders' equity, which collectively help assess the company's financial health. By presenting this information on a particular date, typically at the end of a reporting period, the balance sheet allows stakeholders to evaluate what the company owns and owes, providing insights into its liquidity and capital structure.

The other options describe different financial statements or reports. For instance, the first option discusses a cash flow statement that tracks cash inflows and outflows over a specific time frame, emphasizing how cash is generated and used. The third option relates to an income statement, which summarizes revenues, expenses, and profit margins over a period, focusing on a company's operational performance rather than its financial position. The fourth option concerns an expense report that outlines operational costs incurred during the year, significant for understanding spending but separate from the overall financial snapshot that a balance sheet offers.