Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which term refers to a financial report that shows a business's equity at a specific time?

1. Balance sheet

2. Income statement

3. Owner equity statement

4. Cash flow statement

The correct answer is: Owner equity statement

The term that refers to a financial report showing a business's equity at a specific time is the balance sheet. A balance sheet provides a snapshot of a company's financial position, displaying its assets, liabilities, and equity at a particular date. It is structured around the accounting equation: Assets = Liabilities + Equity. This document helps stakeholders understand the net worth of the business and how resources are financed through debt and owner investment, thereby reflecting the owner's equity in the company. While the owner equity statement details changes in equity over time, it does not provide a specific point-in-time snapshot as the balance sheet does. The income statement focuses on a company's revenues and expenses over a period, and the cash flow statement summarizes cash inflows and outflows during a set duration. Therefore, the balance sheet is the most appropriate term for a report showing equity as of a certain date.