A statement of financial condition or balance sheet is also called

A statement of financial condition or balance sheet is also called

• A. Income Statement
• B. Net Worth Statement
• C. Cash Flow Statement
• D. Equity Statement

Answer: (B)

A balance sheet or statement of financial condition is a snapshot of what the entity owns and what it owes at a specific date, with the remaining amount representing the owner’s equity. That residual, assets minus liabilities, is what people refer to as net worth. Hence this document is commonly called a net worth statement because it highlights the owner’s net position after debts are considered. The other statements have different purposes: an income statement shows profits and losses over a period, a cash flow statement tracks actual cash movements over a period, and an equity statement isn’t a standard, widely used label for this financial report. So the name that best fits a balance sheet is the net worth statement.

A balance sheet or statement of financial condition is a snapshot of what the entity owns and what it owes at a specific date, with the remaining amount representing the owner’s equity. That residual, assets minus liabilities, is what people refer to as net worth. Hence this document is commonly called a net worth statement because it highlights the owner’s net position after debts are considered.

The other statements have different purposes: an income statement shows profits and losses over a period, a cash flow statement tracks actual cash movements over a period, and an equity statement isn’t a standard, widely used label for this financial report. So the name that best fits a balance sheet is the net worth statement.