Which financial statement shows the financial position of a business at a specific point in time?

The balance sheet is the financial statement that presents the financial position of a business at a specific point in time. It provides a snapshot of what the company owns (assets), what it owes (liabilities), and the residual interest of the owners (equity). By listing these elements, the balance sheet helps stakeholders assess the financial health of the business.

To understand its significance, the balance sheet operates under the principle of the accounting equation: Assets = Liabilities + Equity. This equation must always hold true, showcasing how resources are financed by debt or equity investments.

In contrast, the income statement reflects a company's performance over a period of time, detailing revenues and expenses to show profitability, while the cash flow statement outlines the cash inflows and outflows in operating, investing, and financing activities over a certain timeframe. The statement of changes in equity summarizes changes in owner equity over a specific period but does not provide a direct snapshot of the business's overall financial position.