On which of the following financial statements would you expect to find assets, liabilities, and stockholders' equity?
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A. B. C. D.A
The financial statements provide important information about a company's financial position and performance. Assets, liabilities, and stockholders' equity are key components of a company's financial position, and they are typically reported on the balance sheet.
Therefore, the correct answer to the question is A. Balance sheet.
The balance sheet is one of the three primary financial statements, alongside the income statement and statement of cash flows. It provides a snapshot of a company's financial position at a specific point in time, typically at the end of a reporting period such as a quarter or a year.
The balance sheet is structured as follows:
Assets = Liabilities + Stockholders' equity
This equation is known as the accounting equation and it represents the fundamental principle of double-entry accounting, which states that every financial transaction has two equal and opposite effects on the balance sheet.
Assets are resources that a company owns or controls, and they include things like cash, accounts receivable, inventory, property, plant, and equipment, and investments. Liabilities are obligations that a company owes to others, such as loans, accounts payable, and taxes payable. Stockholders' equity represents the residual interest in the assets of the company after all liabilities have been deducted, and it includes things like common stock, retained earnings, and other comprehensive income.
The balance sheet provides important information about a company's liquidity, solvency, and financial flexibility. Investors, creditors, and other stakeholders use the balance sheet to assess a company's ability to meet its financial obligations, fund its operations and growth, and generate a return on investment.
In contrast, the income statement reports a company's revenues and expenses over a period of time, typically a quarter or a year. It shows the company's profitability and net income, but it does not provide information about the company's financial position or the composition of its assets, liabilities, and stockholders' equity.
The statement of cash flows reports a company's cash inflows and outflows over a period of time, and it provides information about the company's operating, investing, and financing activities. It is useful for assessing a company's liquidity and its ability to generate cash flow.
The statement of changes in equity reports changes in the components of stockholders' equity over a period of time, and it shows how a company's retained earnings and other equity accounts have changed due to factors such as net income, dividends, and stock issuances or repurchases. While this statement provides information about changes in equity, it does not report the current financial position of the company in terms of assets and liabilities.