International Association of Accessibility Professionals (IAAP) Certified Administrative Professional (CAP) Practice Exam

Which financial statement would display a company’s assets and liabilities?

1. Cash flow statement

2. Income statement

3. Balance sheet

4. Statement of retained earnings

The correct answer is: Balance sheet

The balance sheet is the financial statement that provides a snapshot of a company's financial position at a specific point in time. It details the assets, liabilities, and shareholders’ equity of the organization. Assets represent what the company owns, such as cash, accounts receivable, inventory, and property. Liabilities reflect what the company owes, including loans, accounts payable, and other financial obligations. The balance sheet follows the accounting equation: Assets = Liabilities + Shareholders' Equity, which highlights the relationship between these components. In contrast, the cash flow statement focuses on the inflows and outflows of cash over a period of time and does not provide a detailed view of the assets and liabilities. The income statement summarizes revenue and expenses, showing the company's profitability over a specific period but does not list assets or liabilities. The statement of retained earnings illustrates changes in equity, particularly retained earnings, yet it does not showcase a comprehensive view of the company's financial position in terms of assets and liabilities.