What document reflects the financial position of a business, detailing its assets, liabilities, and equity?

The correct answer is a Balance Sheet, which is a crucial financial statement that provides a snapshot of a business's financial position at a specific point in time. It details the company's assets, liabilities, and equity, allowing stakeholders to assess the overall financial health of the business.

Assets represent what the business owns, such as cash, inventory, and property. Liabilities indicate what the business owes to outside parties, like loans or accounts payable. Equity reflects the ownership interest in the business, essentially representing the residual interest in the assets after deducting liabilities.

Understanding the balance sheet is essential for evaluating a company's stability, solvency, and operational efficiency. While the income statement provides insights into profitability over a period and the cash flow statement shows the movement of cash in and out of the business, neither reflects the financial position at a specific point in time like the balance sheet does. Similarly, an audit report assesses the accuracy of financial statements but does not provide a direct overview of assets, liabilities, and equity.