What does a balance sheet represent?

A balance sheet is a fundamental financial statement that provides a snapshot of an organization’s financial condition at a specific point in time. It showcases the company’s assets, which are everything it owns, liabilities, which are what it owes, and the equity or capital, representing the ownership interest in the company. This three-part structure is critical for assessing the financial health of an organization, as it allows stakeholders to see how much of the assets are financed through debt versus equity, thus understanding the risk and financial stability of the organization.

The other choices do not accurately describe a balance sheet. Projected sales relate to forecasting and are typically found in sales forecasts or income statements, not a balance sheet. An income statement over multiple periods focuses on revenues and expenses over time rather than providing a static view of assets and liabilities at a specific moment. Capital budgeting deals with long-term investment decisions and is not directly represented by a balance sheet, which is a broader financial overview rather than an analysis of individual projects or investments.