What does a Balance Sheet indicate?

A Balance Sheet provides a snapshot of a company’s financial position at a specific point in time, specifically detailing the assets, liabilities, and equity (or capital accounts) of the business. This is fundamental for stakeholders to assess the company's financial health.

The assets section lists everything the company owns, which can include cash, inventory, property, and equipment. Liabilities detail what the company owes, encompassing loans, accounts payable, and other debts. Finally, the equity portion shows the owner's investment in the business and retained earnings.

Understanding the composition of assets, liabilities, and equity is essential for various stakeholders, including investors, creditors, and management, as it reveals how well the company is using its resources to generate profits and its ability to meet financial obligations.

In contrast, the other choices focus on different aspects of financial reporting: revenues and expenses pertain to an income statement, cash flow and projections focus on liquidity over time, while equity and dividends relate to shareholder distributions. These areas are important but do not define what a Balance Sheet specifically indicates.