Final answer:
The balance sheet is a financial statement that shows a company's financial position at a specific point in time. It includes assets, liabilities, and equity and is prepared using the accrual basis of accounting. The balance sheet is also known as the statement of financial position.
Step-by-step explanation:
The balance sheet is a financial statement that shows a company's financial position at a specific point in time. It includes three main components: assets, liabilities, and equity. Assets are things of value that the company owns, such as cash, inventory, and property. Liabilities are debts or obligations that the company owes, such as loans and accounts payable. Equity represents the ownership interest in the company, which is calculated as assets minus liabilities.
The balance sheet is prepared using the accrual basis of accounting, which means that it records transactions when they occur, regardless of when the cash is received or paid. This allows for a more accurate depiction of a company's financial position. Furthermore, the balance sheet is also known as the statement of financial position.