Florida General Contractor Practice Exam

Which statement includes current and long-term assets, current and long-term liabilities and equity?

1. Income statement

2. Cash flow statement

3. Balance sheet

4. Trial balance

The correct answer is: Balance sheet

The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It is structured around the accounting equation: Assets = Liabilities + Equity. In the balance sheet, current assets (assets expected to be converted into cash or used up within one year) and long-term assets (assets that are expected to provide economic benefit beyond one year) are listed alongside current liabilities (obligations due within one year) and long-term liabilities (obligations due beyond one year). Equity represents the ownership interest in the company. This comprehensive representation makes the balance sheet distinct from the income statement, which focuses only on revenues and expenses over a period of time, thus reflecting profitability rather than financial position. Similarly, the cash flow statement tracks the inflow and outflow of cash within the business over a given time frame, providing insights into liquidity but not asset or liability composition. The trial balance is an internal report that lists all accounts and their balances but does not present the relationships between assets, liabilities, and equity in the same structured format as the balance sheet does. Therefore, the balance sheet is the most appropriate choice for including both current and long-term assets, current and long-term liabilities, along with equity.